Baseball great Yogi Berra’s famous quote certainly applies to today’s real estate market. In the late 1980’s and early 90’s, the U.S. experienced a devastating downturn in the commercial real estate market. It lasted over five years and, although many investors lost huge sums of money, there were a few savvy investors who bought properties for pennies on the dollar. Sound familiar?

In the 1990’s, the government formed the Resolution Trust Corporation (RTC) to take over thousands of Savings & Loans, called their loans due and sold the ensuing foreclosures for chump change. Because there was almost no institutional financing available, investors with cash were able to take advantage of the opportunity this “down” market offered.

At that time, Chicago’s Sam Zell created a new investment product called The Vulture Fund with $409 million of investor capital to get ready for the buying opportunities to come (today this type of fund is known by its politically correct name: Opportunity Fund). He bought as much property as he could and made billions of dollars when he sold out in the late 90’s.

At the turn of the century there was another downturn and it was a repeat performance for Zell and others who again snapped up bargains. Prices shot up until 2006, and he sold out again. Now that we’re in another downturn, guess what Zell’s up to? He’s recently been in the news because he’s doing a repeat performance, buying well below the replacement cost of the property, a tactic that has served him well over the years. He knows that nobody can compete with the rents he can charge tenants and still maintain good cash flow. His winning strategy and track record speaks for itself. He simply takes advantage of a normal cycle in the real estate market.

Today’s cycle is a bit different, though. Commercial properties are not overbuilt (as in the 80’s), so occupancy levels are still high. However, institutional credit has dried up, even for commercial properties, because of the subprime mortgage mess. This lack of liquidity has created some very good bargains for those who can muster the cash. Motivated sellers are willing to provide affordable financing if the buyer can put a sizable down payment on the table. Cash is king these days.

I believe this market represents an extraordinary opportunity for investors to cash in big time. If you believe that the real estate cycle depicted in the graph above makes sense, and agree we’re now in the Recession quadrant of the current cycle, you now have the chance to put Sam Zell’s strategy to work.