Liquidating due to Market Correction?

[Daniel Sisto]

Over the past 3 weeks I have gotten 5 Lead phone calls from different investors asking if I would be interested in some of their property because they are liquidating due to a "feeling" the market is going to change/correct? 

Just wanted to get the opinion of BP on this and see if it is just a coincidence or there is some truth to this?

[Joel Owens]

You are in New York. Clients I have are selling there for 3 caps as well as in California and doing a 1031 to other states.

Those appreciation only type markets have wild swings in values. They are the first to rise and the first to fall.

In commercial I am still landing 8 plus cap rates. At 3 caps there is nowhere to go but up. At 8 caps plus there is room in the marketplace to go a few more years for good deals and long term debt to lock up. A full cycle happens about every 10 years at various times in different asset classes. With long term fixed debt you can ride out until the next cycle to make a move. That is one reason I do not like short term debt plays with loan due in 3 to 5 years. Those only make sense to me if you have a value add and are exiting before the balloon is due.