On November 9, 2007 NetGain published an article titled The Affect of Record Crude Oil Prices on Commercial Real Estate Investment. On the prior day, November 8, 2007, the price for a barrel of crude oil was $95.46. The article concluded:

The arrival of $100 crude per barrel is going to jump start and accelerate the growth of e-commerce’s retail growth. The fourth quarter 2007 estimates to be released by the Census Bureau of the Department of Commerce on February 15, 2008 will show this jump and mark the official beginning of the end of retail business as we know it. Office buildings will continue to reallocate their space usage because more employees will be working at home. Residential housing will need to provide a more integrated resident support system. Commute time will become increasingly more important.

The phrase efficient distance cannot be overemphasized enough. Commercial real estate is not like other operating businesses when it comes to location. It can’t be moved to a more convenient location. Thus, the need for responsive, comprehensive due diligence is no longer an option. Future markets will not bail out poorly located income properties purchased with inadequate due diligence.

Today the price for a barrel of crude oil hovers around $140. The causal affect of the higher cost of energy can be summarized by the following changes. The unemployment rate in November 2007 was 4.75%. Today it is 5.5%. The consumer confidence indicator was 88 in November 2007. Today it is at the record low of 50.6.

Those experiencing the current economic environment for the first time feel like it’s the end of the world. They tend to act emotionally, miss opportunities, and avoid the basics. Those who have seen these cycles before know it’s a time when the opportunities prevail. They don’t act emotionally but stick to the basics. In reference to the current phase of the economic cycle, NetGain has recently published the following items:

• Income Property and Buying Right in a Downturn
• A Commercial Real Estate Survival Plan
• 1929 - Can It Happen Again?
• Investment Holding Periods in a Soft Economy
• A Real Estate Investor Plan for a Serious Economic Downturn

NetGain remains committed to providing the most practical, useful, unbiased information for minimizing risk while maximizing return on income property investment.