All Forum Posts by: Scott McElhaney

Over the last two weeks I have had an open dialogue with all of our mortgage lenders.  I've found regardless of bank/lender size all of our lenders have been very open to assisting us in minimizing or deferring payments until the Coronavirus pandemic subsides.  If you haven't spoken with your lenders you should do so ASAP as this is not a time to "cross fingers" and hope things work themselves out. This is a time to be very proactive, minimize costs and manage cashflow.

Here's a few things I would suggest when contacting your mortgage lenders:

-Speak candidly to your Lender about any upcoming issues you foresee as a result of the Coronavirus pandemic.  If one or more of your tenants has stated they can't pay in April or the foreseeable future then relay this to your Lender;

-Ask your Lender if they currently have or plan to have a "mortgage relief program."  In my experience some Lenders have already rolled out payment relief programs and can immediately assist you in temporarily lowering your payments or deferring them for a set period of time;

-Realize that any relief program offered by a Lender is as dynamic as the Coronavirus.  In other words, it's subject to change.  I've had Lenders initially offer us an Interest Only (IO) Period and state that if things worsen with the pandemic that they'll most likely convert to a Deferral Program;

I hope the above information is helpful.  Please comment with any specific questions and I'll be happy to respond.

Ryan, I've purchased many retail buildings vacant, many in excellent locations. If you can swing it I would negotiate a right during the study period to be able to market the spaces for lease. I've done this several times and have been fortunate to sometimes sign an LOI and even a lease contingent upon our ultimate purchase of the property before closing. However, the goal is really to "test" the market and see how desirable the spaces are in that given market AND if the rents you need to obtain correlate with the negotiated purchase price. You also want to gather feedback from prospective tenants and/or their brokers on their impressions of the building and the spaces....do they think they're appealing, what do they like and what do they not like? I will caution you that retail is a great asset class, it's my personal favorite. However, they can take awhile to lease up AND the Landlord concessions, such as free rent and Tenant Improvement allowance can eat into your numbers quickly. When in doubt run your proformas conservatively.

Matt- ownership via an LLC shouldn't be a problem as most lenders are going to make you personally guarantee the loan anyway. You might want to speak with a commercial lender at your bank as they will all be very familiar with financing property owned by an LLC. This isn't to say you'll fall under commercial lender requirements/terms/rates, but I suspect you're speaking with lenders who do mostly residential owner occupant loans....you're not going to fit within their strict lending parameters.

Scott 

NNN properties can benefit a tenant who wishes to scale and open, or eventually open, many locations. Real estate ownership is capital intensive and when a tenant has mortgages on their balance sheet it can really be a drag on expansion plans. Most other reasons have already been said above and are all great points as well! :-)

I've used Catylist for some markets.  In Charleston SC, where I live, many brokers seem to post their commercial listings on catlyst and CoStar/Loopnet.  Caylist is not in every market, but what I've found is that the listings solely on CoStar (not viewable on Loopnet) tend to be on Catylist and you can look at them free of charge.

Do you have other real estate assets with a good bit of equity?  If so, this could an option to putting less down on your new purchase.  We've been successful bundling a new purchase with an existing property in our portfolio that has a large chunk of equity.  You can cross collateralize the new property purchase with the existing property into one loan and come to the table with less money out of pocket.  

Good Afternoon,

We're getting ready to put a large 200,000+ SF shopping center under contract.  I'm in search of a Lease Abstractor and underwriting/financial analyst to assist in putting together some financial projections for the property.  I'm also in search of someone who can assist in putting together a Pitchbook for the investment offering.  I realize that this is most likely two different professionals.   Please advise if anyone is aware of a company or individual who would be willing to do this on an hourly or cost per project basis.  I've heard some people mention Upwork as a source of pros for this kind of work...I'm fine with that, but would love a referral to a specific Upwork contractor, if possible.

Thank you!