No one ever said real estate was a "piece of cake!"

For some in the real estate profession reading the national newspapers today takes some serious fortitude. Is it really all that terrible?

For us who have seen the 70's, 80's etc it is sadly the same old story!

Like it or not all you new super "hot-shots" the real estate market became overheated. Prices went out of control while "value" remained the same.

I'm not referring to the residential market, friends, I'm referring to the investment real estate market!

The purpose of, shall we say ,sane and old fashion real estate investing, was to obtain positive cash flow after all expenses and debt service!

Somehow, some where the concept of never ending "appreciation of price" was thrown into the equation of investing in commercial properties.

Prices, according to the real estate new super-guru's of the past decade said "prices" were suppose to always go up! And up! AND UP!!

Guess what? They were wrong. Because real estate speculation is NOT real estate investing.

Prices are now heading, once again, to the direction of actual or real income value, which means investment property prices, once the commercial money market tightens a little more, and in my opinion, will begin to fall. And for many reasons.

Once reason is too few viable tenants.

Today the Wall Street Journal reported that the Council of Shopping Centers predicts that 144,0000 stores will close this year. And" this does bode well for mall and shopping center owners."

The same newspaper reported that a real estate firm is going to offer for sale a total of 29 shopping centers at a 10% discount! Humm. Is that a 10% discount off an inflated price? Or 10% discount off the "appreciated price?"

And that firm needs to sell pronto before their stock "value" goes off the chart.

And another reason is the the rising cost of all energy!

So I, for one, do not see all bad news. What I do see is a very "ill" system recovering.

For those who speculated all I need to say is," the greater the risk the greater either the reward, or the loss." Win some, lose some.

For many individuals, and families and banks it will be very, very painful.
No one every said real estate was easy.
And no one every said real estate was a "piece of cake!"

BIll McInerney