All Forum Posts by: John Lenhart

The thing many bankers always say is that by the time you need to fall back on a personal guarantee, it is usually worthless. One thing to remember is that you can’t go after their retirement accounts or if they have shielded assets in a trust.

The question is how good is the personal guarantee? Yes they have assets but if they are all leveraged to the top, it does not give you much to attach to there. I imagine their credit rating is decent, so there could be a threat to them their credit will go down. Sounds like the husband has a good income which is a positive. 

May be best to try and work something out with them. They can’t pay full amount of the lease as is, maybe you can enter into an agreement with them to allow you to get first crack at all receipts up to a certain threshold or maybe you take an equity position in the business (just thinking out loud here). None of it may be a good idea In the end. 

Regardless, consult with an attorney. 

I would rather be in your position at least where your commercial tenant may have some assets to their name as opposed to a class c commercial tenant whose personal guarantee is not worth the paper it is printed on

You can certainly use a standard real estate contract for the deal. I may encourage you to have an attorney to review the commercial lease for the commercial tenant.

However, if you are looking to get creative with your purchase, such as doing an entity purchase or structured sale you may want to have an attorney draft that language

Best to try USBank since they have a California presence. Many of the smaller lenders will have trouble working with California borrowers

Terry finegan with Finegan inspections does a decent job. 

We are more buy and hold investors. Typically, we do traditional bank financing (however many traditional bank commercial loans still have some sort of prepayment) and once we do the value add, we do the non recourse cash out at that time

For the most part yes, but there are varying degrees of prepayment penalties that can come with the non- recourse loan and some providers will negotiate to a limited extent (not get rid of it altogether but limit it some).

Shop around and see what is out there. Some will have defeasance, some will have yield maint and others may have a waterfall schedule. 

We place glue traps at the perimeter of our facilities away from the units to try and lure any field mice that may be around away from your units

What type of property are you looking for? Ohio is rather diverse so depending on the type of product you are looking at, you can find deals in numerous places

You should certainly use it to negotiate. We had a similar experience a number of years ago. Lender ended up doing the deal but raised our interest rate by 50 basis points.