Being in the business of distressed debt for the past 12 years has taught me a lot about investor appetite in this space, but most importantly, and as with most things, timing is everything. Traditionally, real estate investors and developers never want to have the music stop in the middle of development, days after a recent purchase, or at a time when they are struggling with an investment. However, recessions usually don’t come with warnings for the average owner. This cycle is very different than what we have experienced in the past, and in my opinion, is worse. If you think about it, when the Great Recession hit, as soon as the dust settled over Wall Street, there was nowhere to go but up. With the pandemic, the recovery doesn’t begin until the pandemic ends. So what does that mean for those who have funds waiting on the sidelines and want to be the first in line for distressed debt?
It’s not here yet. Yes, assets are hurting, but if the true recovery hasn’t begun, the impact to value is still unknown. This is one of the most important considerations to those making decisions on buying and selling distressed debt/properties. In my opinion, until the end is in sight for the pandemic, it will be difficult for any investor to underwrite effectively. Next year will provide the best opportunity for purchases of distressed assets. Click to read more at www.dmagazine.com.