The commercial real estate market in America is in a bad position.

According to the Congressional Oversight Panel for TARP
(the government’s rescue program for big banks and financial firms):

Over the next few years, a wave of commercial real estate loan failures could threaten America‘s already-weakened financial system.

The Congressional Oversight Panel is deeply concerned that commercial loan losses could jeopardize the stability of many banks, particularly the nation‘s mid-size and smaller banks, and that as the damage spreads beyond individual banks that it will contribute to prolonged weakness throughout the economy.

Recently on CNBC, Elizabeth Warren, the chair of the Congressional
Oversight Panel for TARP, said: We’re looking at a situation where about half of all commercial real estate loans are going to be underwater by the end of this year, and that is going to have a direct impact on about 3,000 community banks, or about 40 percent of our entire banking system.

In order to survive, these banks will need to move these distressed assets from the non-performing side of the balance sheet to the performing side.

They will accomplish this by making very creative loans on very creative terms. They have no choice but to seriously consider just about any offer.

Once any new loan is in place it is now a performing loan. This is your chance to finally strike it rich and set yourself up for life by making creative offers while banks are highly incentivized to accept.

By comparison, the residential real estate market is in the worst shape it’s been in for many decades, and in the residential market, “only” about 21% of residential properties are currently under water.

How will the commercial real estate debacle affect the health of our nation’s small businesses?

According to Warren a disproportionate number of both commercial real estate loans and small business loans are made by community banks. Therefore, drastic increases in commercial loan losses lead to greater financial trouble for community banks which leads to fewer and smaller small business loans.

As continued funding becomes unavailable to small business, rising unemployment becomes an even greater risk, thus a prolonged weakness throughout the economy.

I will keep you posted on this.

FYI…

If you have not secured a spot yet at one of my upcoming Boot Camps where I show you how to profit from Commercial Foreclosures and Short Sales, you need to act fast as they are selling out all across the country.

CLICK HERE to check which Boot Camp still has a few remaining seats.

As every Boot Camp we’re offering other than October is either sold out or very close to sold out, we have added one last date in San Diego, CA.

Sign up now as seats are selling out quickly and no more dates will be added in 2010!

I look forward to meeting you in person at one of the Boot Camps!

Fondly,

Karen Hanover, CCIM Candidate
Apartment Education Institute, President