"Endless streams of cash are flooding commercial/investment real estate and reshaping global property management." "This is a tidal wave." "Too much money has been raised for both debt and equity and it is not going to be returned any time soon."
Such are the statements in a Dec. 26, 2006 story in Debt & Equity Journal describing the virtual flood of cash available from sources such as banks, life companies and others. The obvious winners are borrowers, says Nat Zvislo, research director at Real Estate Capital Institute, in the article. Long term interest rates are continuing to drop, the prime rate has remained unchanged since August, and funding sources for investment property are more creative and aggressive than at any time in a year, he adds.
So what does this mean? Funding sources are incredibly bullish on investment real estate for institutional investors. What does this mean for individual investors? The same flood of cash is also available as lenders understand today more than ever that investment real estate is a smart bet. Going into 2007, individual investors -- borrowers -- truly are in a position to exploit the leveraging of borrowed funds and come out on top.