Short Sale Commander Blog

First it was the residential real estate collapse. Now comes the commercial real estate collapse! Commercial has lagged behind residential by 12 to 18 months, but is now here. Commercial foreclosures are all over now.

This will be much bigger than the residential situation we have seen over the past three years. Commercial properties are financed differently than residential. They typically have mortgages on them that balloon (need to be paid off) in 3,7, or 10 years. When these loans come due, they are typically refinanced. In today\’s depreciating market, a lot of these commercial properties will not qualify for refinancing. The economy has prompted businesses to downsize or close putting more pressure on commercial property owners. Often rent reductions are given to attempt to keep tenants. Even with reductions, many businesses are closing their doors. Third thing is there are no government programs to help businesses keep their properties. (unless it is a bank or car manufacture!)

If the owners cannot refinance or pay off the mortgage, the owners may try to hang on, but foreclosure is often the outcome.

These properties can then be sold at great prices and are often snapped up by investors. They often lease them out at a positive cash flow.

Commercial property owners may be held responsible for the difference amount forgiven for the short sale, and the amount forgiven may be required to act as income on their tax return. Commercial property owners should contact their tax and legal teams before continuing to see how this may impact their overall tax and financial situation.

This is the clear solution as the U.S. market goes through a major restructuring. The opportunities for profit for investors and removing liabilities for owners will be huge.

This entry was posted on Monday, February 1st, 2010 at 10:41 AM and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.