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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 10, 2019

Darrin:  Yeal Tamar, what is the BIGGEST RISK? 

Yael:  So there are many risks in real estate. I guess the top ones are market risk, then picking the wrong asset. And and I would say liquidity risk because of the impending crisis or recession that's going to happen. Now, on the asset level and the market level, you can mitigate these risks with information. Right. So you can look and to market reports you have plenty, CBRE, Colliers. You know, that information is out there for you to show where they think market is going. There are credit agencies. There are all kinds of indicators, right. On the asset risk. And I guess it's split in two. 

Number one is your due diligence. You know how much you know about these asset owners, asset managers, developers and so on. So if you did your due diligence. And number two is basically if they're doing the right. If there is a right fit from the asset to the market. Right. So if if residential real estate is a big one in this area or commercial or so, you kind of have to have real estate experience. Right. So understand this. So if you're a savvy investor, this kind of comes natural to you. So there's a combination of market research and the market fit. So this is a market fit. So both of these things you kind of can solve because with more information, more experience. 

Now, the third type of risk, the liquidity risk is much more problematic because ultimately what you have is forces that are beyond your control. You know, like an impending crisis or a race or recession or or maybe there is a war breaking out all of a sudden in that country or a hurricane or a tornado. You know, there are many things that could happen. And insurance companies, obviously are also aware of these of these like force majeure or maybe even, you know, trends. So with this in mind, you know, we're talking to many real estate investors right now and they're saying, well, we're not investing in development projects in certain areas that we see there is gonna be a slowdown. So we're looking for either a quick flip or a yielding project in those areas. And it's understandable because they don't want to be tied in in a property that's going to go down in value. Now, that's liquidity risk.

Now, if we're solving partially, you know, the liquidity problem in which, you know, you can sell your property, you're probably not going to be able to sell it at a full price, obviously, because there's going to be less buyers. But you still have a possibility to recover some costs or to, you know, to get out before a certain time, which you deem more risky. So and that's over. We're in this business. You know, we feel that the other types of risks can be solved. Like I said, with more information and more data, which we provide to the maximum and the liquidity risk we're mitigating through enabling trade of these assets.

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