Closed Banks and Closed Coffee Shops – Commercial Property
Investing in Commercial Property
Florida is a special place for those tourists and local individuals who want to experience a different kind of lifestyle. This place offers a different kind ambiance for those people who want to relax and feel comfortable. Florida is a place that is rich in beautiful spots and beaches. It is a perfect place for those beach lovers.
Recently many hedge funds and private equity companies have recognized that opportunity exists for firms that can help fill the funding gap by offering private commercial mortgages to quality borrowers who have been shut out by their banks. Over the last 18 months money managers have committed hundreds of millions of dollars to the commercial real estate finance sector. They are buying distressed mortgage paper directly from troubled lenders and they are very willing to write new loans against commercial buildings and development projects.
But before commercial real estate investors seek a loan from a hedge fund or other private lender there are some important things they should know.
It is hard to do the tenant improvements on a closed bank and make it into a fast food restaurant. After all, what are you going to do with a giant walking and safe, which is surrounded by concrete and steel? Will the fast food restaurant merely use this to store paper cups? It’s not as if you’re going to dig out 2 feet of concrete reinforced steel and a giant fault with high tech stainless steel.
When a coffee shop goes out of business, it can be converted into something else for instance a Chinese restaurant, but generally the kitchen area is very small so it will require a lot of tenant improvement work, which makes it more difficult to get a tenant to replace them due to the cost of the TI work. This means that the commercial property owner will have to make an extremely good deal to get that building leased.
Often, they will opt for either another bank or another coffee shop in the same building and give a discount to the new tenant while they try to collect money from the old tenant that still owes money on the lease.
These are all considerations when it comes to commercial property and management, and making it through the recession. Please consider this
Resource Author Francisco R. Higueras
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