Commercial real estate crisis a buyer opportunity

There may just be some great deals to be had for commercial property investors. Is now a good time to start a business?

One mans loss is another's gain, with commercial real estate that  old adage holds true as well. With prices dropping and more foreclosures in the commercial real estate sector and incentives for employers and business expansion coming about it just may be. 

“Here come the real estate vultures”

“(Fortune Magazine) -- These are tempting times for real estate bargain hunters. Whether it's the tony house down the street with an asking price that keeps dropping or office space at a deep discount, if you have the means, there are deals to be had. Individual investors snapping up foreclosed houses have helped boost home-sale figures sharply in recent months (although prices have remained depressed). And now some real estate investment trusts are raising money to fund acquisitions of distressed commercial properties.”

By Michael V. Copeland 
June 22, 2009
Fortune Magazine Full Article here

“Distress among commercial real estate mortgages in New Jersey is intensifying”

“with more properties in the state going back to the lenders. Some industry insiders say a crisis may be in the works if the economy continues to falter.

You’re certainly seeing an increasing rate of foreclosures, and of lenders taking back properties,” said David Bernhaut, executive vice president at the East Rutherford office of Cushman & Wakefield, a commercial real estate brokerage. “It’s distress that everybody feels and senses.

New Jersey currently has nearly $3.6 billion of distressed commercial assets, according to Real Capital Analytics, a New York-based research and consulting firm. Distressed assets include those in foreclosure or bankruptcy, have been restructured or modified, or have been taken back by the lender through foreclosure. “

So can now be a great time for the commercial investors to begin peaking their heads out? I would say that it depends on your financial ability to maintain the property if it should experience a lower than normal occupancy for a while.

“Lenders are currently lending at a 50 percent to 65 percent loan-to-value ratio, compared to 70 percent or 75 percent five years ago, said Kenneth Pasternak, chairman of KABR Real Estate Investment Partners LLC, a Paramus-based opportunistic real estate investment fund. Meanwhile, real estate is being appraised at values that are off by 25 percent of what they were five years ago, he said.”

 

Source: NJ Biz Article by Evelyn Lee 11/9/09
Full Article here: Fearing a commercial Real Estate crisis

This may just be putting current owners between a rock and tight place presenting the kind of opportunities and deals investors generally look for.

www.MarivicRealty.com
Local: 732-650-9911
Toll Free: 1-866-745-GMAC(4622)
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Troubled Home Owners Have Options

IS YOUR MORTGAGE PAYMENT DROWNING YOU?

This is commonly referred to by industry professionals with lingo such as a Home Owner being Under Water.

Well home owners under water have options and you should know about all your options before making a move BUT make a move and take action to do something NOW!!!

The longer you wait, the better the chance you will lose your home, ruin your credit and still owe money to your mortgage lender.

Contact us or your mortgage company immediately to see what can can be done to help. Keep in mind it may be better to have a 3rd party to assist in assembling the package of required documents with profit / loss statements, income / expense sheets, BPO's and other documents to help try and get a Loan Modification that you can live with.

Many home owners attempting to do this on their own are not always successful or risk allowing the banks to take advantage of them.

Remember you have options and we can help!

In most cases we find it's better for many home owners to attempt to sell their home by short changing the bank by selling for less then is owned to the lender or lenders and getting them to agree to this. This type of sale is called a Short Sale, it should be obvious why.

Short Sales can help home owners under water by allowing them in most cases to avoid foreclosure, bankruptcy and in essence saving their credit from total destruction.

Short Sales usually show on credit reports as Paid Settled or Settled for less than amount owed, either way it is way better then a foreclosure and in many cases will allow for a person in such situations to be able to qualify for a mortgage again in as little as two years, with a Foreclosure we'll see ya after 10 years!

So why is this a better option?

• Short sales are not Foreclosures so your credit can be salvaged fairly quickly with better management of your finances from that point forward essentially giving you a "do over".
• You won't be stuck owning a home which you owe more than it's worth. If you opt for a Loan Modification or Forbearance so you can keep the home the downfall is you will end up owing even more for the house once the lender tacks on to the back of the mortgage all the late fees and missed payments, they don't just forgive that money if you're keeping the house. (These modifications are usually only temporary reverting back to prevailing interest rates and higher payments after 3 to 5 years putting back where you started in a few more years.)
  

If you found any part of this article helpful or if it left you scratching your head with only more questions, call us today!

Our agents are standing by to assist with all your real estate needs including a search for another place to live ie: rentals


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Marivic GMAC Real Estate
2056A Lincoln Highway (Rt. 27)
Edison, NJ 08817-3330
Office: 732-650-9911
Toll Free: 1-866-745-GMAC(4622) Ext.302
http://www.MarivicRealty.com
Email: contactus2@marivicrealty.com

IMPORTANT: Short Sale, Refinancing, Loan Modification info

Mortgage Default Income Tax Relief
H.R. 3648

Important information:

Have you recently or are thinking about doing any of the following:

• Refinancing
• Short Sale or Pre-Foreclosure Sale
• Loan Modification
• Loan Restructuring
• Ask your Lender to Reduce or Forgive a Debt

Although disliked today by many people with short memories or who don’t even follow his politics and forgot or never even knew all the good that President Bush has done, it seem hating him is the Politically Correct or PC thing to do these days as so many follow suite.

This is really another great thing President Bush has done which is taken for granted these days but many find themselves so thankful for without giving the proper credit where it is due. Without H.R. 3648 real estate would really be dead in the water today to a degree which would be catastrophic in comparison to what is currently being experienced; so for all the leftists and Bush haters out there, I am certain this bill has touched you or someone you know in ways you cannot even begin to imagine.

Due to the act which this article will address many have been able to keep their homes or sell them and make settlement agreements with their lenders for an amount less than what was owed without having to pay an additional income tax for the amount which was forgiven by the lender.

Many people who are using the short sales method today to sell their homes, which has become so common only makes financial sense to do so and made possible to do so due to this act initiated by none other then George W. himself.

"When your home is losing value and your family is under financial stress, the last thing you need is to be hit with higher taxes. So I'm working with members of both parties to pass a bill that will protect homeowners from having to pay taxes on cancelled mortgage debt."

─ President George W. Bush, 9/1/07
VIDEO: President Bush Signs H.R. 3648

Thursday December 20th 2007 President Bush signed into law H.R. 3648: Mortgage Forgiveness Debt Relief Act of 2007 to amend the Internal Revenue Code of 1986 to exclude discharges of indebtedness on principal residences from gross income, and for other purposes.

So what are we really talking about here?
Tax laws consider forgiven debt as income, which can leave those of you with foreclosed homes with some unexpected tax bills. Let's say I loan you a million dollars. Now I go, "Oh, wait. Never mind. You can keep it." The IRS considers that income. You would have to pay the taxes on your million dollars.

The tricky part comes in when I'm not just loaning you a million dollars. I'm loaning you money to buy an overpriced home that you can't afford and I can't sell for as much as you owe me once I take it back from you.

So how does this bill affect me?
Here is where the Mortgage Forgiveness Debt Relief Act of 2007 comes in to play.

Under current law, if the value of your house declines, and your bank or lender forgives a portion of your mortgage, the tax code treats the amount forgiven as income that can be taxed.
Under the tax code, a lender who forgives a borrower's debt must provide a form 1099 to the IRS reporting the forgiveness of indebtedness as income to the borrower. The new legislation from Bush provides taxpayers who experience a home loan foreclosure or renegotiation resulting in forgiveness of indebtedness income with three year exclusion up to $2 million.

Bush said during the signing ceremony: "The law will increase the incentive for borrowers and lenders to work together to refinance loans -- and it will allow American families to secure lower mortgage payments without facing higher taxes."
Ahhh…. You may be scratching your head at this point so let’s simplify that a little further.
Under the Mortgage Debt Forgiveness Act of 2007, some homeowners granted forgiveness of mortgage debt won't have to pay taxes on that amount. But there are some restrictions:

1. There is a limit on the forgiven debt: up to $2 million or $1 million for a married person filing a separate return.
2. The tax break also has a time limit. It only applies to mortgage debt discharged by a lender in 2007, 2008 or 2009.
3. The loan also must have been taken out to buy or build a primary residence, not a second or vacation home. If debt is forgiven on those additional properties, the owner will owe cancellation of debt income as usual.

This law comes with a new tax form which must be filed if you find yourself in the unfortunate situation of having to do a short sale or if you are able to manage to work with your lender and by the grace of god manage to get them to forgive some of the debt and restructure you loan so that you can keep your house among other possible scenarios where you experience a debt forgiveness.
You will be required to file the new IRS tax Form 982.

If home mortgage borrowers are entitled to forgiveness for the income tax consequences of their default, who is to blame? Forgiveness of indebtedness income corresponds with the forgiving lender's bad debt deduction.

The House Ways and Means Committee in September, Rep. Kevin Brady, R-Texas, said that he wished the cost of paying for the relief was more tightly targeted to the lenders and real estate speculators who helped create the subprime lending crisis. Committee Chairman Charles B. Rangel's, D-N.Y. response explains it all for you. "It's so much easier to give the tax break than to pay for it."

Either way without the help of the Mortgage Forgiveness Debt Relief Act of 2007 we would be seeing a lot more of this going around. Read the story

Additional Sources:

• IRS on the Mortgage Forgiveness Debt Relief Act
• Mortgage Work Outs Now Tax-Free
• Hope Now The Home Owner Preservation Alliance 1.888.995.HOPE
• FACT SHEET - The Mortgage Forgiveness Debt Relief Act of 2007
• VIDEO: President Bush Signs H.R. 3648
• Official White House Press Release about H.R. 3648 Mortgage Forgiveness Debt Relief Act of 2007
• Wikipedia About George W. Bush
• George W. Bush Presidential Library