commercial real estate income funds
Financial Planner Jordan Goodman was recently on WGN’s Steve Cochran’s radio show recommending commercial real estate income funds. It sounds too good to be true. What are your thoughts regarding this type of investment, and more specifically, the associated risks? Thanks for your advice.
Terry Says
I've said many times that it is too good to be true -- forever. When the next recession comes along, there will be problems getting your money out! I respect Jordan, but we disagree on this issue. And, you know, I hope he is right. I hope that no catastrophe looms! BUT, if this is "chicken money" it does not belong in this speculative "investment." Think of it this way -- if these commercial real estate loans were so good, banks would be jumping to make them! The banks are loaded with money and looking to make loan deals. But these are deals the banks have passed on, because they were too risky. And it's ok to take risk --but you need to get paid for taking that risk. The yield on these deals is not nearly enough to compensate for the risk you are taking. The people who are putting the deals together, and advertising them, are taking a nice slice upfront -- thereby lowering the current yie So even if there is no real estate catastrophe in the future, there's not enough yield today to compensate for the risk. Again, I don't want to be in the position to say I told you so. But I strongly suspect that one day I will! This is a speculation, not a yield play.
