The world of commercial real estate is no stranger to ebbs and flows, but 2023 is shaping up to be a tempestuous year unlike any other. With a staggering $450 billion in loans coming due and predictions of massive defaults, many are bracing for impact. But what if I told you that within this looming storm, there lies a silver lining?
A chance not just to weather the storm, but to sail through it, turning challenges into opportunities. In this post, we’ll delve deep into the causes of the impending collapse, drawing parallels with previous market upheavals, and most importantly, charting a course for those ready to seize the moment.
Whether you’re a seasoned investor or a newbie, understanding the landscape and adopting a service-oriented approach could be your key to unlocking unprecedented wealth in these turbulent times. In this video Marco Kozlowski talks about the challenges and opportunities in real estate that have risen from these very challenges.
Learn more here: https://www.marcokozlowskimentor.com/buy-from-home
Summary of Marco Kozlowski’s Video
- Impending Crisis: Over the next 18 months, a significant portion of commercial loans (56%) are coming due, amounting to $450 billion. JPMorgan Chase predicts over $200 billion will default due to inability to refinance or sell.
- Causes of the Collapse:
- Overenthusiasm: Many investors, driven by FOMO (Fear of Missing Out), overpaid for properties expecting continuous growth, reminiscent of the 2002-2004 and 2021-2022 periods.
- Bad Assumptions: Investors wrongly assumed that rents would always rise and that selling would always be easy.
- Short-Term Debt: Many took short-term loans expecting to refinance or sell within a couple of years. However, interest rates rose, making refinancing unfeasible for many.
- Opportunity Amidst Crisis: The commercial real estate downturn presents a chance for informed investors to capitalize. Marco Kozlowski references the 2007-2009 crash, suggesting that those who understand the market can make significant gains.
- Service-Oriented Approach: The key to success during this period is to approach the situation with a mindset of service, helping those in distress. This not only feels good but can also be financially rewarding.
- Training and Skillset: Proper training and understanding of the market can lead to substantial wealth generation. The speaker offers guidance on how to navigate this challenging period, emphasizing that this isn’t a get-rich-quick scheme but a sound business strategy.
Check out more videos from Marco Kozlowski’s Youtube Channel
Listen to his podcasts: Big Fat Real Estate Checks
What is expected to happen in the commercial real estate market over the next 18 months?
Over the next 18 months, a significant 56% of commercial loans, amounting to $450 billion, are predicted to come due. JPMorgan Chase anticipates that over $200 billion of this will default due to challenges in refinancing or selling.
Why are so many commercial loans predicted to default?
Several factors contribute to this. Many investors, driven by FOMO (Fear of Missing Out), overpaid for properties, expecting continuous growth. Additionally, there were assumptions that rents would always rise and that selling properties would always be easy. The rise in interest rates has also made refinancing unfeasible for many.
How does the current situation compare to previous years in real estate?
The current scenario is reminiscent of the 2002-2004 and 2021-2022 periods where many investors bought properties at high prices, expecting continuous growth. The speaker also references the 2007-2009 crash, suggesting similarities in market dynamics.
Is there any opportunity amidst this predicted collapse?
Absolutely. While the downturn is concerning for many, it presents a chance for informed investors to capitalize. Those who understand the market dynamics and are prepared can make significant gains during this period.
What is the recommended approach for investors during this period?
The key to success is adopting a service-oriented approach. Instead of merely seeking profit, investors should aim to help those in distress. This approach is not only ethically sound but can also lead to substantial financial rewards.
How important is proper training and understanding of the market during this time?
It’s crucial. Proper training and a deep understanding of the market can lead to substantial wealth generation. It’s essential to be well-informed and to navigate the challenging period with a sound strategy.
Is this a get-rich-quick opportunity?
No, this isn’t a get-rich-quick scheme. It’s about understanding the market, adopting a service-oriented approach, and making informed decisions. It’s a sound business strategy that requires dedication and knowledge.
What’s the significance of interest rates in this scenario?
Many investors took short-term loans expecting to refinance or sell within a couple of years. However, interest rates have risen, making refinancing unfeasible for many, especially those who bought properties with low returns.
How can one protect their investments during this period?
The first rule of real estate is to buy right – at the right terms, rates, and price. Avoiding the pitfalls of FOMO and making informed decisions based on proper training and understanding of the market can help protect and even grow your investments.