You’ve done well investing in real estate, and are looking to grow your portfolio. Your broker just called and gave you the “hot-tip” of the week: That sparkling Class A office building at Main and Main, the one you have coveted since investor-infancy, will be coming to market in three months. Now your firm has …
While no one is happy when a foreclosure occurs, it does allow a lender to recoup funds it may lose when a borrower defaults. Unfortunately, because the foreclosure process takes time, and the borrower stays in control of the property and its income stream during that time, foreclosure also poses significant risks to the lender. …
Market leasing assumptions define what happens after a tenant lease expires in a commercial property. Since it’s unknown whether the tenant will renew its lease or not, there are two sets of assumptions. One set of assumptions is used if a new tenant needs to be found. The second set of assumptions is used if …
A borrower facing foreclosure is in a bad spot. Loss of their property, litigation costs, damage to their reputation because of the lawsuit, and damage to their ability to borrow money in the future. A lender facing foreclosure is in a bad spot too. The risk that a foreclosure sale won’t bring enough proceeds to …
When a borrower fails to meet its loan obligations, the lender may try to foreclose on the property securing the loan. “Foreclosure” is just the series of steps a lender has to take in order to force the sale of such property and use the sale proceeds to recover its unpaid debt. This is simple enough …
How do you feel about a criminal conviction on your record? Defending against a civil suit for intentional infliction of emotional damage? They don’t sound too bad? Well, how about a fistfight with a tenant on the front lawn of your rental property? If you’d prefer to avoid these scenarios, it might be a good …
Buying at the tail end of the housing bubble in early 2006, an old professor of mine bought more house than he should have. After a divorce and an expensive health issue, he just couldn’t make the loan payments anymore. In fact, he admitted that he was nearly insolvent. He’d taken a second loan secured …
Arms length transactions are important to understand in commercial real estate, particularly for lenders. To see why, consider the following scenario. Suppose you’re the lender to an LLC formed to acquire an office building. However, after closing the loan, you discover that the LLC’s managing member is the brother of the seller. It turns out the brothers conspired to transfer …
You’re considering the purchase of a particular property, but know it doesn’t conform to the city’s zoning ordinance. As such, you’ve negotiated the purchase contract so that closing is conditional upon you first being able to bring the property, and your intended use of it, into compliance. What type of application do you make? Rezone it …
Why is zoning important? Zoning laws determine what kind of structures can be built, whether or not an existing property can be re-purposed, and even whether or not an existing structure can be replaced with something new at all. Of course, even if these aren’t changes you are currently considering, you might have a neighbor trying …