Flipping Commercial Real Estate

If you don’t know anything about flipping commercial real estate, then you should read this article to discover all three ways to flip commercial real estate.

I have been investing in real estate for 20 years and this is the most exciting time. The distressed commercial market has created an environment where lenders are dumping commercial properties off their books at Give Away Prices that are vastly lower than anything I have ever seen.

Commercial real estate is still worth something. We all drive by, stop in, shop, and see our doctors and dentists in commercial real estate. Our society will always need and value commercial real estate. The problem is that the over-heated real estate market created situations where good commercial properties, with well run, viable businesses, were saddled with huge loans that were suddenly no longer affordable once the economy went South.

The Solution

Over the past three or four years, the answer has not been found. Commercial lenders decided to make multiple short term extensions on their loans rather than push for foreclosure. Most of the time, the lenders don’t want to end up owning commercial real estate right now. The lender may accept a cash payoff and walk away from the rest of the money owed to them if they agree to take part in a commercial workout.

This relates to us as investors. The essential components of a commercial flip are brought into place by us and we get paid quite well for our efforts. You don’t need to own or manage anything, just put the flip together and get paid.

The Commercial Back flip is my favorite method of flipping commercial real estate. There are other ways to flip commercial property that you can’t back flip.

There are 3 ways to flip commercial property.

Get it under contract and flip it.

If you want to add value, you can either get it under contract, find a tenant, or make other changes to NOI.

Once you know how to get the cash to close these deals, the parties to a deal are: The commercial property owner is in default. An attorney is fighting for a property owner. A lender who wants to get out by reducing the debt or cashing out at a big discount. You can be the one who helps to find and put the deal together, it doesn’t require any money. It’s pretty cool.

There are requirements for a commercial back flip. Property must be in default almost always. The existing owner must want to keep the property. We use NOI to calculate today’s value. After 6 to 8 months, an exit lender can refi the bridge loan.