Brett Fagan - Bozeman Real Estate - Montana Land & Ranches

"At the top of the market, the cap rates of tertiary-market properties were similar to properties in primary and secondary markets." (CCIM Institute) Coupled with the fact that Balance Sheet Lenders, i.e., institutions that lend per the Balance-Sheet, aka, Portfolio Lenders, are filling the void left by the dearth of solvent secondary Commercial Mortgage Backed Securities (CMBS) markets, it may be time to take another look at investing in smaller commercial real estate markets, because local lenders know their towns and commercial property real estate values are dropping in tertiary markets, too.

As you know, Balance Sheet or Portfolio Lenders are conservative, "old-fashioned" lenders, common both with life insurance businesses and, pay attention, with regional savings and loan institutions, like you find in Bozeman, Montana. With this old "norm" returning, meaning retaining debt on your own books and not repackaging the debt into securities which are then sold off, "a number of the balance-sheet lenders are also using secondary markets as opportunities to stand out and diversify their offerings," (CCIM Institute) which means it may be the time to consider securing your loan at the local level in not just the secondary commercial real estate markets but also in the tertiary commercial real estate and smaller markets like the Bozeman commercial real estate market. "While location continues to play the most prominent role in commercial real estate investment, some balance-sheet lenders are finding that the most opportunistic locations may not be in the most obvious places." (CCIM Institute)

Note: "Second Quarter 2008 SIOR Commercial Real Estate Index, compiled by the Society of Industrial and Office Realtors (SIOR) in association with the National Association of Realtors (NAR), indicated that commercial real estate markets have not yet begun their rebound" and have "dropped for a sixth straight quarter to an overall total of 76.4 points. A score of 76.4 reflects conditions that are significantly less favorable for landlords and sellers, but excellent for tenants and purchasers." (Magellan USA)

Bozeman Commercial Real Estate - Bozeman Commercial Property

Call - 406.579.3115 or email - brett.fagan@prumt.com

Thanks to Elizabeth Weintraub's blog, "Who Should Buy Flood Insurance?" for giving me the idea for this short piece:

One wouldn't think Montanans would need to be concerned about earthquake insurance, but according to the USGS (US Geological Survey) "Montana is one of the most seismically active States in the Union." The 1959 Hebgen Lake earthquake, the largest ever recorded in Montana, of 7.8 magnitude, killed 28 and caused about $11 million in damage to roads and timber.

Missouri is another state one wouldn't think would need to be too concerned about earthquake activity, but did you know Missouri has a history of extreme seismic activity? According to the USGS, on December 16, 1811, "shortly after 2 AM, the first tremor of the most violent series of earthquakes in the United States history struck southeast Missouri....In the small town of New Madrid."

My point? Most of us know that Alaskans and Californians should seriously consider earthquake insurance, but what about other areas of the US? Take a look at the map below. There are quite a few areas of the US with substantial seismic activity. Worth a second look...

According to the Montana State Auditor's Office, "the yearly cost of residential earthquake insurance is normally about $1.50 to $3.00 Per $1,000 of coverage on the structure, depending on the type of construction and the condition of the property."

Our earthquake insurance is only about $400/year. Is it worth it? If and when a temblor hits, the $400/year for any number of years makes it worth it! Where do you live? What do you think?

Bozeman Real Estate - Montana Real Estate