It’s what I’ve heard from commercial lenders and also from a few horror stories.
There are not a lot of “distressed” commercial sellers. They tend to be more savvy than most and will usually not sell into a bad deal. These people are usually able to hold on to a property for a long time.
Being commercial, these guys will not agree to a long term deal. They will usually require that the loan be paid off within a few years (3 years to 5 at most). If you go into this type of deal, there is no guarantee that you will be able to find a new loan within that time frame. As investors, we are always optimistic that someone will give us funding but in commercial it is just too risky. If you are not able to find funding in that time, you will be stuck trying to renegotiate with the owner/seller on worse terms or accepting a last minute deal from a commercial lender with not so favorable terms.
If it cash flows terrific, you should be able to find funding. If it isn’t, then the lenders will not want to give you funding anyways. That’s kind of a sign that maybe the deal you have is not so terrific as you thought.
Just my two cents. It happened to me and I was VERY fortunate to find funding. Understand that I’m kind of an easy going person and very positive, but the owner/seller in my case was a total ass and I would not recommend that experience to anyone. Live and learn.
