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With all this time on my hands, I am thinking of what is going on in my business and the impact of the COVID-19 virus. I have to tell you, as a property owner, I have a handful of tenants unable to pay rent because of the state orders to close or limit their business activities. As I sit here, I am saying to myself that I am happy for the tenants who are strong credit tenants because they are able to guarantee their leases, which is something prudent to look for at the onset of signing a lease with a tenant. Wow, this is a different world than 45 days ago when most of my tenants were going about their regular business with no major concerns as to paying rent.
Creditworthiness is considerably one of the most important parts of investing or owning commercial real estate. The rent or lease payment that you receive is all or part of your gross cash flow. Out of that gross cash flow, you would pay your expenses like taxes, insurance, utilities, and mortgage (to name a few). Remember cash flow is king! We buy commercial real estate for the cash flow it delivers in the form of passive income. A key factor of importance when investing or owning commercial real estate is to be sure your tenant can guarantee to pay the rent or lease payment as set forth by the terms of your lease. When you lease to a tenant, the tenant commits to pay you a particular amount over a period of time. It is important to have a well-written lease and guarantees from the tenant to have confidence payment will continuously be received without issue.
May I ask of you: It would be very helpful to me if you could answer a couple of questions as a means of reciprocity. I promise it won’t take more than 2 minutes.
1. What would you want to know more about that was not discussed here? 2. What unanswered questions do you have?
To answer these questions follow the link www.masterdevelopment.net to a free 8 Fundamentals of Commercial Real Estate.
Thank You so much and stay safe.
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