Deploying Excess Capital in Volatile Markets

Taking advatage of downturns in the real estate markets

The goal of all investments have always been "Buy low, sell high". But if it was that easy, no one would lose money investing.

Here are some things to take into consideration when looking at investments during a down market.

  • Long Term Outlook of Property

A property is not a "good deal" if it cannot stay rented. Is this area one that tenants desire? Are people leaving the area for a reason? Is this property in distress and if so why? Make sure you are buying something because it meets your investment criteria, and is not just a "good deal"

  • Limited Liquidity for Investment

Your investment may be stuck in the asset for some time until the market improves. You may have no access to the investment and if you are going to need this capital for another project soon, consider other options.

  • Cash Requirements for CapEx

What deferred maintenance does the property have? Will you need to substantially remodel to lure new tenants? What is the condition of the HVAC, roof and other major systems?

  • Limited Availability of Commercial Loans

You may need to be able to front the entire investment in cash if commercial loans are not available (and which rarely are in downturns) Be prepared with the cash to purchase the property  and do any improvements needed to make your investment goals.

  • Stability of the Current Tenant base

Will the tenant base make it? Are you planning on cash flows that are already in default or are with tenants that are on unstable footings? How can you be certain to the viability of the rent roll?

  • Having an Investment Plan

Making your investment plan now will help to know the right investment opportunity when you see it, and quickly screen those that are not. If you haven’t started your plan yet, visit our planning page for some tips below.

Learn More about Investment PLanning