22:40
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Real estate has occupied a prominent place
in the financial structure of most economies for many years. At the
same time most people realize that something major has changed for real
estate during the past five to ten years. This is true for both
residential property and commercial real estate, and it is important to
realize what has really changed and what it means to everyone impacted
by these changes. Here is an overview of some primary examples to
illustrate a changing commercial property environment.
One striking reality is that commercial real estate financing for small businesses is no longer available from many banks. Commercial borrowers no longer have the same choices that they had just a few years ago for buying a business or refinancing a commercial mortgage loan. Meanwhile a slow to backward economy has contributed to decreasing real estate values in both commercial and residential real estate. Before we entered this latest phase of the economic cycle, many homeowners and small business owners counted on steadily increasing property values to contribute positively to their financial net worth and future retirement options. Slow and steady contributions to paying off their mortgage would lead to an outcome that is good for them individually, the overall economy and the society at large. This traditional path to economic well-being has become littered with new and difficult obstacles.
When banking institutions pull the plug on their willingness to provide financial support for commercial mortgage loans, this does not mean that other financial alternatives do not exist. The need to fire your bank and banker is a second commercial real estate reality. Although small business owners rarely enjoy firing their bank, it is increasingly a necessary alternative strategy that prudent commercial borrowers cannot afford to overlook. If this is a real world example of "If life gives you lemons, make lemonade", it might be refreshing to learn that the lemonade can turn out to be surprisingly good in this case. Quite a few small businesses have found better financial terms and lower loan fees because they were forced to seek new commercial real estate financing sources when their original bank lender said "No."
Stephen Bush has provided candid business advice to commercial borrowers for over 30 years. He specializes in commercial real estate loan negotiations with business lenders. Steve delivers practical business finance planning help to small businesses throughout the United States and Canada.
One striking reality is that commercial real estate financing for small businesses is no longer available from many banks. Commercial borrowers no longer have the same choices that they had just a few years ago for buying a business or refinancing a commercial mortgage loan. Meanwhile a slow to backward economy has contributed to decreasing real estate values in both commercial and residential real estate. Before we entered this latest phase of the economic cycle, many homeowners and small business owners counted on steadily increasing property values to contribute positively to their financial net worth and future retirement options. Slow and steady contributions to paying off their mortgage would lead to an outcome that is good for them individually, the overall economy and the society at large. This traditional path to economic well-being has become littered with new and difficult obstacles.
When banking institutions pull the plug on their willingness to provide financial support for commercial mortgage loans, this does not mean that other financial alternatives do not exist. The need to fire your bank and banker is a second commercial real estate reality. Although small business owners rarely enjoy firing their bank, it is increasingly a necessary alternative strategy that prudent commercial borrowers cannot afford to overlook. If this is a real world example of "If life gives you lemons, make lemonade", it might be refreshing to learn that the lemonade can turn out to be surprisingly good in this case. Quite a few small businesses have found better financial terms and lower loan fees because they were forced to seek new commercial real estate financing sources when their original bank lender said "No."
Stephen Bush has provided candid business advice to commercial borrowers for over 30 years. He specializes in commercial real estate loan negotiations with business lenders. Steve delivers practical business finance planning help to small businesses throughout the United States and Canada.
Posted in: Real Estate
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