Commercial Tenants and COVID-19—Be Flexible, Flatten the Curve

The spread of the coronavirus COVID-19 has disrupted a vast majority of businesses in the United States. Most companies weren’t prepared to survive this pandemic, which has put a halt to their operations.

As a commercial real estate owner, your income depends on the success of your tenants’ businesses. With the rent due on April 1, many tenants are struggling to stay in business and meet their financial obligations, including lease payment for their commercial space.

Therefore, you must establish open communication with your tenants during these unpredictable times to plan ahead to keep your commercial investment protected. Here’s how to deal with commercial tenants during the COVID-19 outbreak:

Ensure a good business relationship with your tenants

It’s recommended that you maintain a good business relationship with your commercial tenants during this difficult period and also let them know that you care about their business.

You may help them find a solution like facilitate them in applying for an SBA Disaster Relief Loan, which will be beneficial for both you and your tenant.

Remember, it’s a two-way street. Your financial interests are tied with your commercial tenant, so their financial success will ultimately translate to your victory.

Express your willingness to work with them

If your tenant cannot afford to continue making lease payments, you can work out different arrangements, depending on your lease agreement.

It’s not a good idea to lose your tenant at a time when it’ll be incredibly difficult to find a new one. But you also can’t take the financial hit as it can put your investment in danger.

However, if you have some financial cushion available, you can reduce their rent by half or defer all of it for the next couple of months, or maybe more, to help them survive the crisis.

Litigation should be your final option

It may seem tempting to sue your commercial tenant overs non-payment, but you must first consider dialogue with your cash-strapped tenants to figure out a way forward.

The courts are closed except for emergency cases, and lawsuits require an extensive amount of time and resources, so it’s better to reach an arrangement through mutual consensus.

If you and your commercial tenants cannot come into an agreement and there’s no room for further negotiation, only then you should pursue legal recourse.

READ: Dealing With Poor Commercial Tenants: Here’s What You Need To Know

Final words

You must remain flexible with your tenants if you want to retain them, but also explore other commercial real estate options at the same time.

You must take care of operating costs like mortgage payments, heating and security of your commercial property, so you must make an informed choice

Look for opportunities to invest in other commercial real estate properties like warehouses or retail centers that can generate sustainable income.

 About Global Capital Partners Fund

Global Capital Partners Fund is a renowned asset-based lender in Greensboro, NC that provides hard money loans to help investors take advantage of profitable CRE investment opportunities available in the market. To learn more about their services, call at +1-800-514-7350, or visit their website.

Categories: Real Estate

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