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Kathy Fettke talks to us today about where we’re at in the market cycle for commercial real estate and how you don’t have to accept low cap rates.

Kathy explains how there are billions of dollars in loans that will soon be due and how this situation can be an opportunity for real estate investors with access to capital.

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the flipnerd.com REI Classroom where experts from across the real

estate investing industry teach you quick lessons to take your business to the next level. And now,

let’s meet today’s expert host.
Kathy: Hi, welcome to REI Classroom. I’m Kathy Fettke, co-CEO of Real Wealth Network and host of

The Real Wealth Show on iTunes, and I want to talk to you a little bit about commercial real estate.

Mike: This REI Classroom real estate lesson is sponsored by the investormachine.com, FlipNerd’s

private investor coaching program and your blueprint to investing success.
Kathy: Because I follow market cycles, and I’m really concerned about the cycle that we’re in right

now, because so many people, experienced investors and new investors, are jumping in and settling

for really low cap rates thinking that they’ll never be anything good so they’re just going to settle on

kind of good. I’ve got to tell you that never is the case. Every 10 years we have a market cycle. Prices

go up and prices go down.
Here’s why I believe prices will begin to soften in commercial real estate and you don’t have to settle

for low cap rates. Coming this August, $90 billion worth of commercial loans are coming due.

They’re not resetting. They’re coming due. It’s estimated that about half of those, about $45 billion

of commercial loans, won’t have new financing available because either the values have gone down

or the incomes have gone down on those properties, so banks would only refi if the owner put in

more money.
Not all owners are going to have that kind of money to put into those projects, because many of

these loans were taken back in 2006 when anyone could walk in the bank and get a loan. They didn’t

really have to have much commercial real estate experience. They could also get commercial loans

sometimes as high as 95% LTV. Well, that’s not available today, so many of these loans, $45 billion

worth, are going to be put into the distressed asset category.
You could settle for a low cap rate today, or you could wait three or four months, or even now start

to find the people who are in this predicament. If you can help them with some end financing then

you can get a piece of the deal most likely. It would be a really good time to learn how to negotiate

with banks because the banks aren’t going to be able to take back all these assets so they might

renegotiate the loans. It’s a really good time to be a great bank loan negotiator and also a great time

to have access to money.
If you’re not a syndicator already, learn how to raise money because you can go in and acquire these

properties coming up in the next few months, again starting in August, even starting now if you can

find the people who are going to need your help. If you are one of those people, don’t wait until

August. Find out what your different exit strategies could be, because there may not be end

financing for you and you don’t want to lose this property to foreclosure just because you can’t

make the balloon payment.
Again, don’t settle for low cap rates. Know that there’s really good deals coming. Everything cycles.

We’ve been at a real peak. Don’t pay peak pricing. Wait, because prices are about to soften in

commercial real estate.
All right, I’m Kathy Fettke and this is REI Classroom. Thanks for joining me.
Mike: Are you looking to change your life through real estate investing? If you’re interested in either

getting started or taking your business to the next level, please check out FlipNerd’s private program

at theinvestormachine.com. This is the most robust real estate investor coaching, networking, and

mastermind on the planet and designed for your success.
If you’re ready to roll up your sleeves, ready to take personal responsibility for your own success, and

ready to dive into a world-class instructional coaching program that provides you step-by-step

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Please note, the views and opinions expressed by the individuals in this program do not necessarily

reflect those of flipnerd.com or any of its partners, advertisers, or affiliates. Please consult

professionals before making any investment or tax decisions as real estate investing can be risky.

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Katherine Fettke

Katherine Fettke |

Real Estate Agent
Kathy Fettke is the CEO of Real Wealth Network, host of the Real Wealth Show in iTunes, and best selling author of Retire Rich with Rentals. With a passion for researching real estate market cycles, Kathy is a frequent guest expert on CNN, CNBC, Fox, Bloomberg, NPR, CBS MarketWatch and the Wall Street Journal. She was also named among the “Top 100 Most Intriguing Entrepreneurs” by Goldman Sachs two years in a row.
Katherine Fettke

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