Below is a listing of articles I've written about commercial real estate financing.
These articles are available for reprint under the Creative Commons license: Attribution-ShareAlike 2.0 Generic.
The coronavirus is affecting every facet of the world and commercial real estate is no exception. As a commercial real estate investor, you likely already have tenants asking for a break on the rent. With evictions off the table, your tenants could stop paying rent altogether while you still must pay your expenses like taxes and insurance, not to mention your mortgage payment. The buck stops with you.
Many apartment investors tell me they’ve paid off their debt years ago and have no need for a loan. While I applaud those debt-free investors for their prudence, I worry they could be leaving something on the table. One of the advantages of investing in real estate is that you can magnify your returns with low cost leverage.
Things change... your perspective, your appetite for risk, and even your investment criteria. Sometimes the best thing you can do is move forward, and that can mean selling an investment property. When the time comes, you will have to pay off any existing liens before transferring title. For many investors, the biggest lien is their commercial mortgage. But just as you would research and prepare to purchase, you must also prepare when you intend to sell a property. Let’s take a closer look at potential hurdles so you aren’t surprised at close of escrow.
Many apartment investors don’t like debt, so rather than refinancing, they would prefer to pay off their loans. Why get a new loan when you’d prefer to have no loan? If that describes you, you may want to reconsider. Used wisely, debt is a powerful tool that can help you reach your short- and long-term investment goals. Let’s take a look at seven challenges and how refinancing can be a solution.
The easiest loans are permanent mortgages on stabilized multifamily properties, especially if it is a low leverage request (loan-to-value no greater than 60% and debt service coverage of at least 1.30x). If your loan request looks like that, lenders will be eager to lend on your property. This makes the job of finding a loan much easier. So easy that you may not need a commercial mortgage broker’s assistance to place your loan. If you’re interested in do-it-yourself financing, here are the basic steps of the process to follow.
Reviewing your portfolio of investment properties should provide a sense of satisfaction. Thanks to your decades of hard work, your portfolio generates cash and operates like a well-oiled machine. But would this continue without you? Is your spouse or successor up to speed on how your portfolio operates? Do they know the addresses for each property you own? Will they be surprised when something you consider routine occurs at one of your properties?
Nick Schoch