For the next few weeks, we are going to briefly address commercial real estate issues. Some will relate to residential transactions also. However, for the most part, commercial transactions exist in a world of their own.... a world that is much different than the residential world of real estate.
The first topic of discussion is financing. Generally, in a residential real
estate transaction, the credit worthiness of the buyer is the main item of
concern. In a commercial transaction the property is the key and there are
multiple issues that a potential lender will look at. Some of those factors
are: location, visibility, access/traffic patterns, the use of the property,
experience of the owner, developer, management team, market conditions and the financial strengths and experience of the borrower. These are only a few of the factors that are taken into consideration.
There is also a growing trend in using leases as a means for financing. Stay
tuned next week for more on leases and how they are used in commercial real estate transactions