Brooklyn, NY · Member since 2017 · 39 posts · 7 votes
Hi all,
I know that in commercial lending it depends alot on the income of the property. But I'm not clear yet how this works, like what steps to take to boost the income, or whatever else can be done.
Any advice would be greatly appreciated.
Thank you
@Sol G. I've mostly read about and implemented strategies like this with multi-family residential rentals. Basically you need to increase the NOI by increasing revenue or decreasing expenses. There are many threads on this over in the multi-family forum so I'm not going to write much on it but generally the strategies are to increase occupancy and/or raise rents. Usually this involves some kind of rehab to make the units more attractive to tenants. But maybe not if you luck into a building in an area that is in such demand you can boost rents without even improving the units.
On the expense side, common strategies are to bill the utility costs back to the tenant, reduce payroll/management expenses, renegotiate contracts, etc.
As I said there are many forums on this and also several good books so I'd just advise you to go read those.
If instead you are asking about a commercial property in a different class like retail, office or industrial, it's hard to answer without knowing more about the specific property.
But generally the process is the same. Look at where you can increase revenues and/or decrease expenses. With commercial, because the leases are longer term and the tenants are stickier I would advise you to focus more on the revenue side.
In other words, it's all about the lease. You are buying/ improving the property with the leases you can put in place.
I'm actually fairly new to non-multifamily commercial but give me more specifics about the property you are working on and I'll try to help.
Thanks Jeff Kehl it's a residential property with six units, and as far as I know that's considered commercial (as in a mortgage for sure). Am I right?