Commercial Mortgage Notes Weighing Your Investments Down?

By: John Gill


Commercial real estate is often an effective barometer of the economic health of a community. You can argue wages and unemployment statistics, but it’s hard to ignore multiple, empty storefronts or for lease signs in office buildings. This isn’t great for communities – and it’s even worse for you, when you own the note on the building in question. Your borrower has to absorb the extra cost without help from tenants, making you less sure of his ability to make payments.

Now these rough times have never completely sunk the commercial real estate market, but that’s a situation that owes itself in large part to the banks’ willingness to wait out the bad times, and private note holders managing their investments intelligently, with advice from legal and real estate professionals on tap. But this past decade has been a little different. We had a housing bubble of unparalleled scope. This raised commercial real estate prices as well and all of the liquidity kicking around convinced many people to invest in commercial real estate who never would have dreamed of doing so with the same finances back in the 90s.

The upshot of this is that there are a lot of folks with commercial mortgage notes who are just now beginning to discover that they aren’t quite up to the task of managing these notes and frankly, wouldn’t know what to do if they had to foreclose and resell the property. In many cases, these people acquired the property with their own loans. They have a debt to pay.

You the reader may be in this situation now. You bought in when there was more liquidity and now, tremors in the real estate market and a general economic malaise have led to a far different situation than the one you bought into. It is never too early to take a close look at what you’d be willing to do to protect your note. Are you ready to take your borrower to court? Can you cover your own debts?

If you’re honest with yourself, you may conclude that you’ll only do so much to manage your note through rough times. In this case, consider selling your commercial mortgage note. Your note may not be the right investment for you any more, but there are always people out there for whom it’s the right fit. These include property management companies and other commercial realty businesses.

We specialize in bringing together mortgage notes with the people best suited for them through a process designed to get the seller the best cash value possible.

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DMO Direct Funding is a mortgage note buyer that accepts mortgages notes, land contracts and trust deeds from throughout the United States. Contact DMO for a free quote if you plan to sell mortgage notes.

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