Commercial property offers better value than its residential counterpart. However, despite the relative ease of investing in commercial property, strategic thinking helps maximize the value of one’s purchase. Like with any other type of investment, the aim is to “buy low and sell high.” So when is the best time to buy low? The answer lies in the real estate value cycle. Learn more in this presentation by Matt Doheny.

1. THE BEST TIME TO BUY
COMMERCIAL REAL ESTATE
CREATED BY MATT DOHENY

2. COMMERCIAL
PROPERTY
OFFERS
BETTER VALUE
THAN ITS
RESIDENTIAL
COUNTERPART.

3. COMMERCIAL
TENANTS ALSO
SIGN LONGER
LEASES, WHICH
GENERATE
MORE CASH
FLOW THAN
RESIDENTIAL
ONES.

4. COMBINED
WITH BIGGER
TAX WRITE-
OFFS FOR
COMMERCIAL
PROPERTIES,
COMMERCIAL
INVESTORS
SEE BIGGER
RETURNS.

5. HOWEVER,
DESPITE THE
RELATIVE EASE OF
INVESTING IN
COMMERCIAL
PROPERTY,
STRATEGIC
THINKING HELPS
MAXIMIZE THE
VALUE OF ONE’S
PURCHASE.

6. LIKE WITH
ANY OTHER
TYPE OF
INVESTMENT,
THE AIM IS TO
“BUY LOW
AND SELL
HIGH.”

7. THE ANSWER LIES IN
THE REAL ESTATE
VALUE CYCLE.
SO WHEN IS
THE BEST
TIME TO
BUY LOW?
…

8. PRICES RISE AND FALL IN 4 STAGES:
RECESSION, RECOVERY, EXPANSION,
& CONTRACTION

9. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (RECESSION)
DURING
RECESSION,
PROPERTY
PRICES ARE
LOW BUT
FINANCING
BECOMES
SCARCE OR
EXPENSIVE.

10. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (RECESSION)
COMMERCIAL
PROPERTIES
ALSO HAVE
HIGHER
VACANCIES
DURING THIS
TIME.

11. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (RECESSION)
NEVERTHELESS,
BECAUSE SELLERS
ARE MORE LIKELY TO
NEGOTIATE A LOWER
PRICE AND THE
GENERAL PRICE TREND
TYPICALLY FALLS
BELOW REPLACEMENT
COSTS, THIS IS THE
BEST TIME FOR
BUYERS WITH HIGH
LIQUIDITY TO INVEST.

12. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (RECESSION)
HOWEVER, POTENTIAL INVESTORS IN THIS
STAGE SHOULD NOTE THAT IN ADDITION TO
HAVING ENOUGH CASH TO PURCHASE A
COMMERCIAL PROPERTY, THEY SHOULD ALSO
HAVE EXTRA RESERVES TO PAY FOR CARRYING
COSTS, EXPENSES ASSOCIATED WITH RUNNING
THE PROPERTY WHILE VACANCIES ARE HIGH.

13. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (RECOVERY)
AS THE REAL
ESTATE
MARKET
IMPROVES, IT
ENTERS THE
RECOVERY
PHASE.

14. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (RECOVERY)
MORE TENANTS
RETURN TO THE
MARKET AS
CONFIDENCE IN IT
INCREASES.

15. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (RECOVERY)
PROPERTY
OWNERS CAN
ALSO EXPECT
BETTER
FINANCING
OPTIONS
DURING THIS
TIME.

16. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (RECOVERY)
BUT BECAUSE
PROPERTY PRICES
HAVE NOT YET REACHED
A ZENITH, THIS IS STILL
AN EXCELLENT TIME TO
BUY COMMERCIAL
PROPERTY, ESPECIALLY
FOR THOSE BUYERS
WHO WILL NEED A
MORTGAGE.

17. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (RECOVERY)
NEVERTHELESS,
A GOOD LEVEL
OF LIQUIDITY
REMAINS
IMPORTANT AT
THIS STAGE.

18. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (RECOVERY)
MOST
COMMERCIAL
LENDERS LIKE
TO SEE A 30%
DOWN PAYMENT
BEFORE THEY
WILL GREEN
LIGHT A LOAN.

19. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (RECOVERY)
EVEN IF THEY
REQUIRE LESS,
COMMERCIAL
SELLERS
TRADITIONALLY
REQUIRE AT LEAST A
20% DOWN PAYMENT
FOR A DEAL TO BE
STRUCK.

20. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (EXPANSION)
ONCE
RECOVERY IS
COMPLETE
THE MARKET
BEGINS ITS
EXPANSION.

21. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (EXPANSION)
AT THIS POINT,
VACANCIES ARE LOW
AND FINANCING
BECOMES READILY
AVAILABLE, BUT THE
PRICE OF REAL ESTATE
MAY JUMP HIGHER
THAN ITS MAXIMUM
DURING PREVIOUS
EXPANSION PHASES.

22. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (EXPANSION)
FOR
INVESTORS
WHO ALREADY
OWN
COMMERCIAL
PROPERTY,
THIS IS THE
BEST TIME TO
“SELL HIGH.”

23. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (EXPANSION)
THOUGH IT IS
POSSIBLE FOR
BUYERS TO FIND A
GOOD DEAL
DURING THIS TIME,
RISING PRICES
MAKE DOING SO
MORE DIFFICULT.

24. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (EXPANSION)
POTENTIAL
INVESTORS SHOULD
BE MORE MINDFUL
OF THEIR SPECIFIC
NEEDS AND PRICE
TREND INDICATORS IF
THEY ARE LOOKING
TO PURCHASE
DURING THIS STAGE.

25. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (CONTRACTION)
EVENTUALLY,
THE REAL
ESTATE MARKET
BEGINS TO
CONTRACT.

26. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (CONTRACTION)
VACANCIES
INCREASE AND
PROPERTY PRICES
START COMING
DOWN.

27. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (CONTRACTION)
BECAUSE THE
MARKET WAS
OVERSATURATED
DURING THE
EXPANSION
PHASE, FINANCING
BECOMES MORE
EXPENSIVE AND
HARDER TO GET.

28. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE | (CONTRACTION)
PURCHASING
MAY BE A GOOD
IDEA, BUT
PRICES WILL BE
LOWER IN THE
COMING
RECESSION
PHASE.

29. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE BY MATT DOHENY
UNFORTUNATELY, THERE IS NO SET DURATION
FOR ANY OF THE FOUR PHASES, AND
SOMETIMES THE EARLY STAGES OF EACH
ARE DIFFICULT TO ASCERTAIN.

30. THE BEST TIME TO BUY COMMERCIAL REAL ESTATE BY MATT DOHENY
NEVERTHELESS, AT SOME POINT THE SIGNS
THAT INDICATE EACH STAGE BECOME CLEAR,
ALLOWING POTENTIAL BUYERS AMPLE
OPPORTUNITIES TO FORM THEIR
INVESTMENT STRATEGIES.

31. WWW.MATTDOHENY.NET
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‣ Matthew “Matt” A. Doheny holds an extensive
curriculum vitae as an entrepreneur, finance
expert and political pundit which features
past and current successes in the industries
of the investment fund, distressed asset and
financial management. Currently Matt serves
on the board of Kodak Co. and Yellow Truck.
He also functions as a Director of Affinity
Gaming, and has done so since 2013. He is
the proprietor of two of the “Thousand
Islands” — an archipelago that sits between
the Canadian – U.S. Border — and currently
lives in Watertown with his family.