We get a lot of questions regarding the commercial loan business. Many are from our peers that want our opinions on the commercial loan business.
Warren Buffet was on the radio this morning. He stated “when the markets greedy, be fearful. When the markets fearful, you be greedy.” I think we can all apply that perspective on our positions in the commercial loan business. In a few years, the credit crisis will have settled. The commercial loan business will be different, but it will still be viable.
There will be more government regulation for sure and probably more intense review of the credit rating agencies out there, like moody’s etc. Perhaps there will be a new type of loan structure replacing the current CMBS platform, but the players that pulled out will be kicking themselves as they see their competition making serous money and they will still be learning the “ropes” of their new chosen field. The survivors will make big headway in market share.
We believe that the problems can and will be fix. This is just another recession in a long list of them. We go through this every 10 to 15 years. Now is the time to adapt and refine your skills – not the time to pull out. We tend to think a lot about what is still funding. What lenders and banks are still looking at deals? Never mind what the borrower wants or thinks he should get. It’s more an attitude of take it or leave it.
The commercial loan business is still moving forward, with a limp for sure, but it’s still moving forward. For example we are still closing loans. Both owner occ and investment. This is the time people build substantial wealth as they pick up bargain opportunities or take chunks of market share that just wouldn’t be possible during normal times.