[Note: To follow is part two of an excerpt of a radio show interview conducted by Peter L. Mosca, host of Income Property Investment Talk dot com, with the executive team at RealSource: Michael Anderson, CCIM; founder and co-owner, Nate Hanks, CCIM; co-owner, and Blaine Walker, President and 2010 Chairman of the Realtors Commercial Alliance. To listen to the show archive or download an MP3, go to www.IncomePropertyInvestmentTalk.com/1213009.]

Mosca: Do you see 2010 presenting similar investment opportunities and possibilities to investors who are blessed with the money to invest into these opportunities?

Anderson: Yes, but I have noticed that the price in the wholesale markets and retail markets for a number of different types of assets have started to move up so the opportunities obviously are not going to be as great unless there is a tremendous inflow of new distressed product into the market. Right now the pricing seems to be moving upward. Even though there are still great opportunities out there, they are just not going to be as cheap, I don’t think, as they were in 2009 unless they become a lot more plentiful.

Hanks: I see a lot of cash just waiting to pounce. People aren’t buying things unless it is at a huge discount. Cash is waiting to see how this bottoms out. 2010 is going to be a very interesting year. It’s not going to be nearly as bad as ’09 but the biggest thing overhanging all of them is of course the liquidity in the capital markets. Without much liquidity in the capital markets then all you’ve got are these people on the sidelines with a lot of cash that aren’t going to be able to jump in with as much vigor as they would they were liquidity.

Walker: With Congress focusing primarily on healthcare the last several months, it has pulled their focus away from other issues that are critical to the commercial industry and that are getting financing going. Plus, with the restrictions they put on banks, they are telling them to loan but then they are restricting what they can loan on so their hands are somewhat tied. They are in a catch 22 and the banks don’t know what to do. When you look at a number of factors out there -- the difficulty of financing and a great number of banks due to fail -- there will be more property coming on the market, both commercial and residential. There is a demand for cash out there and those cash buyers are the ones that are going to be able to take advantage of the opportunities. The problem is, like you say, once you get the property, what do you do with it if you can’t finance it? I’m hopeful that Congress will look at the commercial industry and the commercial lending practices that are out there today and allow banks to make those loans and provide some type of a source similar to TALF to get more CMBS money refinanced as it comes due. There is $1.3 trillion coming due in the next 2 ½ years. They are not all in default but they are coming due and they are going to have to be refinanced. How do you refinance those? Those are the issues that I see we have to deal with. I’m hoping it will be a soft landing in commercial.

Mosca: Is there a chance that what we are going to start to see in some pockets of the country multiple offers on properties?

Hanks: I definitely believe that that is going to happen in different parts of the country in 2010, especially in lower end homes -- the $250,000 to $300,000 price range. The larger homes are still very sluggish and slow but it seems like that low end is moving in a lot of areas especially because of government incentives.

Blaine: It’s the affordability index. We see the same thing in the Salt Lake and Utah County markets in Utah. Homes in the $185,000 to $225,000 are seeing multiple offers. That market is moving quite well.

Mosca: Am I being too optimistic in listening to what I am hearing now in thinking that this might be the start of good positive news, especially if residential starts to kick up and consumer confidence starts to rise a little bit. Won’t that impact commercial maybe in the second half of 2010 in a positive way?

Anderson: It will. Numbers from the ICSC on this year’s retail season are up about 2% from the previous year, which admitted was dismal but it shows considerable consumer confidence returning. There is demand for durable goods to have to be replaced because you know – kids grow out of their clothes eventually. I think there are good signs but I live in a more Pollyanna world as do my business partners. Once you get consumer confidence restored, the unemployment rate starts coming down, the under employment rate improves, people eventually have to go back to living their lives. I do believe that retail will evolve and come out of that. I’ve already seen some incredibly creative liquidity solutions for retail coming to the market place recently and our good friend Steve Moreira brought up that the SBA is still making loans to retailers.

Walker: The housing market typically leads us into and out of these recessionary periods. The fact that housing brought us into this, which is what I believe, housing will lead us back out again and that’s starting to happen in the affordability area. If that can continue, that allows people to then move up to the higher ranges. The only fear I have is that once that starts to happen that might tighten interest rates to the point where it could shut things off. We need a period of softness for that to recover fully before they get too rambunctious with the interest rates.

Hanks: One of the keys we are going to have to monitor closely is the workforce. It seems like America as a whole has gone away from the innovation and from the manufacturing and the type of jobs that really can make a difference in the country and we’ve become such a service industry that we are just serving each other. It’s going to be interesting to watch the economy and the types of jobs that are created over the next years to see how well the recovery and how strong it really can be rather than just bumping along the bottom for many years.

Mosca: Ggentlemen you know that we always end our program by asking our guests for their golden nugget. What is your golden nugget?

Anderson: If you are going to invest, this is your market. You need to do it now. We have a tendency to inflate our way out of these situations. The best investment to hedge against inflation is going to be real estate with the government spending money the way it is, go now, buy now because through the inflation process your best hedge is the real estate investment.

Hanks: He who has the gold, makes the nuggets. He who has the gold, makes the rules. Go find the gold because now is the time to be buying real estate.

Walker: There are opportunities out there that anyone with the ability to either borrow or that have cash should be out purchasing real estate. They do need to be careful. Remember the fundamentals, look for properties that are well located, have good cash flow, and strong tenant base. Now is the time to buy, just make sure that you use good common sense.

Published: January 28, 2010

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Peter L. Mosca is president and founder of BAK Communications, Inc. He has over 22 years of communications and media consulting experience, serving a variety of nonprofit organizations, including the CCIM Institute and the REALTOR Association on all three levels – national, state and local. He is the Spokesperson Trainer for the CCIM's Jay Levine Academy and trains hundreds of residential REALTORS nationwide to be effective industry spokespeople. He is consistently ranked as "excellent" by about 90% of those who attend his presentations. While his principal consulting focuses are public speaking and media relations development and content delivery and management, Peter is also the host of the Voice America Network's weekly radio program, "Income Property Investment Talk," a one-hour program that brings the powerhouses of commercial and residential real estate to property investors every Wednesday at 11 a.m. EST. Peter is married 17 years to his wife Barbara. They have two children: Ashley, 15 and Kelli, 12. Hence, the name BAK Communications, Inc.