B>Don’t let these Ripples direction.
swamp your Portfolio.
We are focusing on the
A fascinating study came Lender's Losses and the Credit
out last week that gives us all a Contraction is what will run us
first glimpse into the all over.
street-level impact of the
How bad is it?
current Credit Crunch... the
The study is titled
"Ripples" of lender's recent
"Leveraged Losses: Lessons
losses that will be the real from the Mortgage Market
impact on you and I.
Meltdown,"
Most press coverage of the
and was written by an all-star
Sub-Prime meltdown is focused on cast from Wall Street, the
the losses the various lending Chicago Fed, and academia.
institutions are facing.
They argue that for every
Those losses are massive and dollar in losses the lending
have required some of our institutions suffer they have to
mainstream banking institutions - shrink their balance sheets by
Merrill Lynch, AIG, Citigroup to $10-$25.
name just a few - to accept
That's right ...for every
bailouts from foreign funds.
dollar they lose there are $25
However ... those losses are less in the kitty to lend you and
not what will affect you and I me.
when we try to get a loan.
The research team predicts
The actual "Ripples" that losses of up to $400 Billion for
will stop us are the Credit the lending industry ... but
Contraction those losses will watch out ... here comes the bus
cause. It's like an old from the other direction...
slapstick comedy where the guy
Remember the losses aren't
looks one way and gets hit by a near as important to you and me
car coming from the other as the way they cause less money
to be available for loans. ask for additional cash from
The study calculates a borrowers, drop their loan to
shrinkage of $2 TRILLION in value ratios, increase debt
assets that would otherwise be in coverage rations, argue every
the hands of borrowers like point of your proforma several
us.
times ... or even stop lending on
That's Trillion with a whole classes of assets.
"T".
The fact is they don't want to
Two Trillion Dollars that will give you a loan right now because
NOT be there for home mortgages, they can't see an end to the
loans for your next apartment losses at the moment. Most of the
purchase, business lines of experts I read are talking about
credit to keep you in rolling losses throughout 2008
widgets.
and recovery in 2009.
Those are ripples the size
What does this all mean to
of Tsunami.
you ...
This contraction has even
- Be ready for a much harder
spawned a rarely heard term go of getting your commercial
...
real estate purchases financed in
"De-Leveraging"
the next 12 months.
De-Leveraging is the opposite
- Hoard your cash. Cash will
of Leveraging.
be King for the foreseeable
It is when the easy money days future. And get to work building
that let anyone borrow (leverage) your private money investor
on even poor quality assets come network in this lull.
to an end.
- Watch for victims of
During a period of De-Leveraging. People who would
De-Leveraging - like we are like to refinance, but can't get
seeing now - the lenders call in a new loan and have to sell their
their chits. They call loans due, property at a steep discount.
- Be on the lookout for "pub-8542272527121315";
quality multifamily. In selected
markets this is the Real Estate
Investor's Niche of the moment. google_alternate_ad_url =
Cash flowing Multifamily is the "http://www.isnare.com/adsense-al
equivalent of a "flight to t-728x90.php";
quality" in this environment.
- Don't expect the Recession google_ad_width = 728;
and Credit Crunch to clear any
time soon. Hang on and remember google_ad_height = 90;
you are in this for the long
haul. The true bargains will google_ad_format =
become apparent as we go deeper "728x90_as";
into the dip.
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About the Author:
Learn the Insider Secrets of Commercial Property Investment from Monte Lee-Wen who has personally purchased over $150M in Commercial Real Estate. CLICK THIS LINK NOW to start your Commercial Real Estate Investing Education with his 14 page FREE Report "35 Reasons You Should Invest in Commercial Real Estate". http://www.investortours.com
Article Tags: cash, credit, losses
