A year ago, I experienced the world economic collapse in abstract terms.
By Christmas of last year, it had become more personal because of the loss in my investment and retirement accounts.
Then, in January and February our commercial tenants began to complain that their businesses were experiencing losses.
March brought even more of the same with tenants of 20, 30 and even 40 years in business calling it quits.
April brought residential tenants moving and breaking their leases, especially young people, because of lost jobs.
Now, not a day goes by that I am not trying to keep tenants in place by offering concessions or deferred rent payments.
Vacant spaces that 18 months ago would be rented within a month now linger without a single showing.
Through the first 6 months of this year, I have hardly had any new commercial tenants.
This may be the worst I have seen the market since the early seventies.
In the past when things were bad, I remember that prospective tenants at least had interest in available spaces.
Now, there is little or no interest.
Businesses are just not opening or expanding.
While summers have always been a bit slow, the summer of 2009 is just dead.
When things are as bad as they are now, the planning and preparation that smart investors did will pay dividends.
Everyone looks like a genius when the economy is doing well.
Why not ignore fundamentals when you can buy a property and mortgage it for more than you paid? It doesn't matter whether the rents collected even equal the monthly interest due...
never mind all the other expenses.
The banks were more than willing to accept those rosy scenarios of ridiculously increasing rents with each passing year.
It was one fantasy atop another.
By the end of the cycle, reality played no part in those investments.
It was inevitable that these investments would fail and would contribute to the collapse of the banks.
Those owners and investors that did their homework and who relied on empirical data and the fundamentals of the real estate markets will come through this period just fine.
There is no substitute for common sense whether the investment is real property, stocks or bonds.
You need to look for a steady reliable return on the money under investment.
Remember you are investing not gambling.
Any money that you are investing is money that you worked long and hard to earn.
The return on that capital will determine how your life will be in retirement, whether your kids and grand kids will have an inheritance or a college education, and whether that house on the beach will someday be yours.
Would you take your money and bet it all on the turning of a roulette wheel? Most likely not.
Then why would think that you would do any better in the stock market or in real estate without applying fundamental investment techniques and principles? It is when times are at their worst that those who practice sound investment techniques will not only survive but prosper.
When the market is as low as it today, this may be the time to buy.
If you have a ten-year horizon, then this may be the opportunity of a lifetime to put your money into real estate.
But do so only after you have investigated the property and have done your homework.
There are credentialed, professional real estate asset managers with the expertise to help you through this process.
Be sure to seek professional advice prior to making such a large financial investment if you are not a seasoned real estate investor.