The following was posted on www.thebizscoop.com on October 24th 2011.
There is starting to be more commercial foreclosure inventory than there has been in the past several years. Not just small apartments but larger apartments as well as office, retail, and industrial foreclosures. That means there are going to be some deals out there and we can reasonably expect prices to continue to fall for at least the next year.
Since 2007, small apartment buildings have seen quite a few foreclosures. That is because investors could get owner user financing on them (at a high loan to value) and once values in the home market plummeted, these properties were under water and were getting foreclosed on at a very high rate. In the past couple of years, larger apartment complexes have begun to become distressed properties and investors with lots of money are starting to see the kinds of deals they have been waiting for the past several years. Commercial money for apartment buildings over 30 units are at lows I have never seen in my career. That creates an opportunity for investors to buy a property at a decent cap rate while also getting low financing. Many investors I talk to think this is the perfect hedge for inflation which they feel is coming soon.