It's no secret that a Commercial Foreclosure BOOM is well on its way! It is projected that 68% of all commercial mortgages will go into default in the next 3 years, which means that 2 out of every 3 commercial buildings will go into foreclosure. If you sit back and think about that for a second you will realize this is HUGE! The next time you drive to the grocery store count every third commercial building and realize that in the next 3 years those building will be empty. And as many as 700 more banks will fold and collapse across the country resulting in HUGE Discounts and Profits for savvy fast acting investors! It's estimated that the value of the Commercial Foreclosure Goldrush is going to be around 1.3 Trillion Dollars.
As with the Residential Real Estate Boom back in 2006, the Commercial Real Estate Market also experienced an explosion. With credit so easy to obtain and so many new investors entering the commercial space there was a huge Commercial Real Estate Boom! Thousands of commercial properties were purchased at the peak of the market and many were highly leveraged. At the time many of the commercial properties performed well enough to cover the debt and operating costs because along with the boom the occupancy rates were at a historic high.
In today's market those same businesses are having to tighten their budgets, unemployment rates are at an all time high, consumers not longer have the ability to spend money on goods and services or travel. Commercial property owner are now feeling the pressure more than ever to try and make ends meet.
Commercial mortgages are different from residential mortgages because they typically must be paid off or refinanced within five years, whereas a residential mortgage often can be paid over 30 years. The dilemma now for commercial property owners is that their properties mortgaged at the height of the market explosion are now reaching their maturity date. With a loss of rental income and vacancy rates increasing, property owners are beginning to feel their financial situation weakening. When combined with one of the tightest credit markets in the last 60 years, commercial foreclosures are about to be seen at an all time high!