Once you have the details, you must decide where the improvements must be made. Keep in mind that the cost of repairs may dwarf what you can borrow. Thus, you must determine how much money to allocate to fix the overall property. For example, if you are repositioning a multiplex, do you need to renovate every single unit at once, or does it make more sense to renovate a few units, fill them, and use the capital to fund further renovations? This is where your experience with real estate will come into play…
Always have an exit plan
Before committing to a repositioning, both borrower and lender must determine what the future cash flow looks like and how much value the commercial property is worth after the process is complete. Borrowers will either want to sell the commercial property outright or refinance with their lender to set themselves up with long-term capital they can borrow against in other ventures. The exit strategy – whatever it may be – needs to be realistic and honoured by both the borrower and lender. For example, we use real data along with our own experience with repositioning commercial properties to ensure we know that the moment we agree to a repositioning, we can clearly see where the endgame will lead us. This ensures that there are minimal surprises, all parties are on the same page, and the repositioning can ultimately be successful.
We want to speak to you about repurposing a commercial property of your own. If you’re eager to revitalize your own commercial property or another you see great promise in, reach out to our team today. From there, we think you’re going to be surprised by what an asset repurposing can be to your working capital.