commercial property should be approve base on income not personal evaluation of the buyer.do you agree?

In General Area - Asked by gloria f. - Jun 25, 2009
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Answer(s)

Paul S.
Broker/Agent
Glendora, CA

Depends on the lender. Some use the property itself as the main "qualifier" and others look heavily toward the borrower. The entity with the money sets the rules.

Jun 25, 2009
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Linda J.
Broker/Agent
Clarkston, WA

I agree; UNLESS there is no income such as a church on a parcel of commercial property. Then I usually value the buildings at p/s/f basis and the land at the going rate of commercial ground in that area.

Jun 25, 2009
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sajjad k.
Broker/Agent
Kent, WA

I do not agree, Both factor play a big role. If there is a strong cash flowing business purchased by an unexperienced buyer, chances are the business will no do as well as an established operator.

Jun 26, 2009
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Joshua P.
La Vergne, TN

If the property is held in an incorporated entity - yes. However, if the property is held by an individual, a lender needs some assurance that nothing TRULY heinous will interfere with their lien. If a person is "vulnerable" to a judgement or other collection action, nothing stops that collecting agent from attempting to levy from a second position on your commercial property. Would that wipe out the first position lender? No, but it could very easily destroy the lease agreements that truly provide that lender (let alone the investor) the very income they rely on to pay the loan.
There are reasons that many lenders do NOT allow a second mortgate on investment property, and this is one of them.

Jul 25, 2009
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