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Commercial Real Estate Pro Network

Commercial Real Estate Professionals who work with Investors, Buyers and Sellers of Commercial Real Estate. We discuss todays opportunities, problems & solutions in Commercial Real Estate.
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Now displaying: Page 1
Dec 27, 2022

J Darrin Gross

I'd like to ask you Jaspreet Baveja, What is the Biggest Risk?

Jaspreet Baveja  

Oh, man, I think I think shifting market trends is the biggest risk, because you never know exactly when it's going to start, you could be in the middle of a transaction when it hits you the hardest. And that makes you lose a deal. Because the market shift changed the valuation, the market shift changed the loan, the lender was willing to give you the market shift changed the rent rates you were expecting to put on your underwriting. And so it's the overall market. Because whether the market is changing because of interest rates, or geopolitical or any, you know, natural risks like Hurricane Ian, that we have now, anything that changes the market to shift, I think is the biggest risk because that is something that is not entirely in your control. And like you said, it's not easy. If you have an insurance claim, sure, it's easy to transfer risk to that insurance company and say, Alright, well, that's what we got you for, let's file a claim. But if you have a deal that's going south, because the property was worth 25 million when you put the offer in for 25 million, and now the market shifted, because the rent rates slowed down, and the interest rates went up. And the biggest job provider that was in the market in that particular area just decided to up and leave like Apple decides to leave San Jose for all this, you know, for some reason, that's going to be a big market shift that you as an operator or as an investor or anything, have no control over. And so that's going to automatically shift all your underwriting all your projections of returns. And so I think the biggest risk is the market shift, whatever the cause may be.

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