The Morality of Acquiring Commercial Real Estate
The Morality of Acquiring Commercial Real Estate
The latest in the line of businesses seeking government handouts is the commercial real estate industry (see following WSJ article “Knock on ‘Opportunity’: Sharp Losses”). Where should the government’s demarcation line be for underwriting the bad loans, mortgages and losses permeating the commercial real estate industry? How does it differentiate between who to help and who not to help?
The answer lies within the morality of the action. With very few exceptions, all commercial property bought and financed within the range of a current 5% capitalization rate was either a greedy and/or foolish transaction. These investors, like the management team at General Motors, created a bad business model whose continuing existence should not be supported. One of the strongest investment tenets in existence is “Don’t throw good money after a bad investment.” The marketplace will make all the appropriate adjustments.
Following are articles authored by NetGain that relate to the morality of acquiring commercial real estate:
19 Feb 2007: Is 5% a Safe Cap Rate?
13 Jan 2009: Minimizing Income Property Investment Risk in 2009
02 Dec 2008: Hara-Kiri for the Income Property Investor
09 Jul 2008: Income Property and Buying Right in a Downturn
25 Jun 2008: A Real Estate Investor Plan for a Serious Economic Downturn
Read the WSJ Article: Knock on ‘Opportunity’: Sharp Losses
