Many of us dedicated to the Commercial Real Estate industry whether from a service position or as an investor, have been repeating the mantra "Commercial Real Estate is a safer investment vehicle than residential."

I am no different. I strongly believe in commercial real estate and one of the reasons is the calculated risk associated with each property. Commercial lending underwriting guidelines are meticulously studied and most lending institutions tighten or loosen those guidelines depending on the real estate market and economic indicators. Of course, today lending guidelines are only being tightened. One can be upset over those new guidelines and perhaps the need of additional money for a down payment but if you think about it carefully and have the ability to negotiate accordingly, a down market can be your best friend rather than your enemy. For example, you may be able to find properties at large discounts or negotiate better pricing with the seller which could include a secondary financing clause.

But the question I hear most from our clients is why is the commercial real estate market being impacted by the meltdown in the residential real estate market? The simple answer is that the sub prime crisis is too large to only impact certain sectors of the real estate markets because lending institutions are required to maintain adequate capital on their books when making loans. If a loan made to a subprime borrower is not going to be repaid, the lending institution needs to write the loan off as capital and the ability to make further loans must be reduced.

What is the solution to this problem? Well, government hopes that the solution is the Emergency Economic Stabilization Act of 2008. This bill, in essence, allows the government to buy bad loans from banks so that banks do not have to take a write off, which means banks can then make further loans with the capital received from the government. But will this plan put an immediate end to our scarce of lending resources? No, the plan needs to be first implemented (which requires government oversight so that it is done correctly) and not to mention overcome any occasional mishaps along the way.

As explained by Chairman Ben S. Bernanke on his October 15th speech, ‘...the expansion of Federal Reserve lending is helping financial firms cope with reduced access to their usual sources of funding and thus is supporting their lending to nonfinancial firms and households ..."

In lay terms, the plan injects liquidity in the market but it will take some time before the effects of that new liquidity will make it to the lending desks of the financial institutions.

Is now a good time to take a vacation for the rest of the year until the markets begin to flow more regularly? No. Not all lending institutions made the bad decisions of making sub-prime loans. This is where a commercial mortgage broker is valuable. We know which lenders are still making loans and we know their guidelines. We can find the loan that works for you and get you the historically low rates that are still available TODAY.

You shouldn't pass on good opportunities -- whether it is a purchase or a refinance to cash out or maximize your cash flow - we are open for business and ready to facilitate your smooth lending transaction.