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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Micawber who wrote (47487)	1/20/2006 10:15:42 AM
From: John Vosilla	Respond to of 306849

Projected versus actual results are two different things as we both know<g> Today, though not as overbuilt as last time, commercial cap rates depend also on very low interest rates projected over the holding period.. Personally I'd put my money in 6 month CD's, some beat up REIT with now high dividend yield or flyover country RE before I'd waste my time with anything in my bubble market that seem so overvalued these days.

To: Micawber who wrote (47487)	1/21/2006 10:56:59 AM
From: Riskmgmt	Read Replies (2) \| Respond to of 306849

Micawber: Good post. Sorry, John, but I was there, and the ACTUAL cap rates were way less than 9%. The projected cap rates that promoters were waving at lenders were 9%, with IRR's in the 15% range. Looked great on paper, and every lawyer, doctor, dentist and chiropractor were calling themselves office developers. And when the bubble finally burst, all the pundits who missed the climb were saying it was the mother of all bubbles, and there wouldn't be another office building built for decades. Sound familiar? And that bubble was created in large part by the tax law changes (accelerated depreciation) and popped by them too when they reversed course and took them away. The current bubble is a combo of tax laws and credit expansion. It will could be uglier than before. Ray