Investing in a commercial property is supposed to be a way to earn residual income; however, market fluctuations and economic uncertainty can cause your dreams to slip away. The trickle-up effect of tenants not paying rent on time and extended periods of vacancy can bring financial woes to the property owner. And if you default on the loan payments, the lender will step in and either foreclose the property or take ownership. To make sure that your investment doesn’t become an REO property, it is important to take early steps.
Recognize Decline of Property
The first step to determining if your asset is in danger of being an REO property is to take an assessment of the property and your tenant history. The signs of decline are often present long before the property falls into disrepair. Two of the most glaring signals that your property is heading for trouble are long periods of vacancy and tenants becoming less credit-worthy.
If the property has been vacant for a while, try to consider possible reasons that tenants do not want to occupy the property. Is it in a bad location? Does the property need repairs? Is your rent too high for the area? Addressing these issues can help you understand the reasons behind vacancies.
Assess the State of Your Property
Once you have examined current and previous tenants, take a look at the property itself. If you have someone else managing the property, it may have been a while since you’ve been there in person. Make sure to examine the exterior of the building and the surrounding area. Pay special attention to unsafe conditions or repairs that need to be made. This is your prospective tenant’s first impression, and you need to make it appealing. Keep an eye out for:
- Broken stairways and handrails
- Cracked, uneven pavement
- Tattered shingles and roofing
- Damaged or missing gutters
- Disheveled landscaping
Once you have examined the property and its grounds, turn your attention to the interior. If the space inside has fallen into disrepair, bringing it back to an inhabitable state should be your first priority. Aside from merely looking around for damage, you should use your other senses as well. Smell for foul odors—these can be indicators of mold, mildew, and animal or insect infestation. Listen to the spaces behind walls, underneath floorboards, and above the ceiling. If you hear dripping water or scurrying footsteps, you will need to promptly address the underlying issues.
Find an REO Specialist in Atlanta
After recognizing the decline and assessing the state of your property, it will be time to call an REO specialist. This is a dedicated team of professionals who can help right the ship. You should look for a company with a history of successfully managing distressed commercial properties and bringing them back to profitability.
At EpiCity Real Estate Services, we are REO specialists who have been providing support to owners and investors in the Atlanta area for over 25 years. Our portfolio includes numerous property rehabilitation projects where we have helped investors recover losses from troubled investments. If your asset is in danger of being foreclosed or becoming an REO property, contact us today to see how we can help make you whole.