While the market is steadily improving, if you aren't looking at all of the ways you can structure a commercial offer during these tight financial times, you'll probably leave money on the table. When it comes to financing commercial real estate, how the deal is structured can be every bit as important as the selling price.
For example, take a sale-lease back. It doesn't have to be this way but this can be a way for you to get into triple net leases while helping an existing business owner at the same time. You can buy a commercial property that a business owner is selling to raise capital. Maybe to expand the business on the other side of town. You bring value to the deal by agreeing to lease the property back to him or her so they don't need to relocate. In exchange, they agree to triple net lease terms.
Seller financing isn't always seller financing. At least not long term seller financing. As we all know, the financial markets are very tight right now. Banks are commonly requiring LTVs in the 65 percent range. A buyer might have a decent down payment but not quite that big. You can temporarily finance the difference to close the deal. Afterwards you sell the note on the secondary market. If you sell it right away, you'll like have to sell at a discount. The longer you season the note the note, the less discount you'll have to accept.
Working with developers can be financially rewarding. There are plenty of developers out there that have partially developed projects that are worth far more than they originally purchased the raw land for. Many of these developers had multiple projects going on when the bottom fell out. They have no way of getting a loan right now to develop much of anything. However, some will agree to sell you a partially developed project for much less than it is currently worth. They ask for the right to buy it back in a few years at a prearranged price. They use the money from selling one project to finish another. Once they sell that, the developer is able to buy the other back from you and willing to give you a generous profit for it.
Making commercial deals is not all about the purchase price. How you structure the deal can be just as important. Whenever you begin negotiations, find out what is most important to the person on the other side of the table. You may have just the solution that person is looking for.
Always look for creative solutions to your real estate deals.
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