Commercial Foreclosures

Is there such a thing? I never see any listing for them, only residential. It seems like commercial owners would default for some reason or another.

Or do they just have more access to capital, and don’t have debt problems?

Commercial properties can be foreclosed upon just like residential. Often times the owner/borrower might just provide a deed in lieu of foreclosure or as they used to say in the old days simply mail in the keys. In a slowing economy commercial properties can be very risky. If they fail to cash flow the owner/borrower has little incentive to make up the difference out of pocket and since he/she is not on the mortgage default is less of an obstacle. In the late '80’s commercial property defaults was a driving force behind the failures in the banking industry.

There are usually lots of foreclosed commercial properties. The thing is, they are not marketed through your typical real estate agent like most REO residential properties are. Most are sold through real estate companies that are commercial specialists and who primarily market to corporate buyers.


Foreclosures have reached record levels in recent months when it comes to residential real estate. This fact has made headlines across the country time and time again. However, underneath the record number of residential foreclosures is an increasing number of foreclosures involving investment real estate, including multi-family properties.

With this understood, if you are interested in making an investment in multi-family real estate at this point in time, you will want to consider the benefits that you can realize be seeking out multi-family properties that are heading towards foreclosure proceedings.

The reality is that if you can identify real estate that is heading towards foreclosure, you likely will find a property owner that will be willing to deal to come up with a fast sale of the real estate. In this regard, you likely will be able to purchase the real estate in question for a price that clocks in at about what is due and owing on the mortgage loan balance. In short, chances are that the current owner simply wants out from under the property and will do nearly anything to avoid the prospect of getting tied up in foreclosure proceedings.

With that said, it is important for you to come to a keen understanding as to why the current owner of the multi-family property has ended up in financial dire straits in the first instance. Towards this end, you need to closely examine the cash flow associated with the real estate. You need to make certain that the cash flow – in the flow of rental income – as compared to expenses is positive before you make a commitment to purchase the real estate in question.

As a final notation, when it comes to seeking a multi-family real estate investment, when it comes to looking for a multi-family property that is facing the prospect of foreclosure, you might want to engage the services of a real estate broker to assist you in that search. A pro real estate broker will have the pulse of the community at hand. He or she will be able to guide you towards multi-family properties that may be heading into foreclosure and that you may be able to purchase for an extremely reasonable price on today’s market. You can obtain a real estate investment that ideally is suited to your goals for a purchase price that is well within your budget.

Richard Stephens

If you have reached a juncture at which you seriously are considering making an investment in real estate, particularly multi-family residential property, you may be wondering what course you can take in order to get the “biggest bang for your buck” when it comes to putting your money into a multi-family real estate investment.

With this in mind, you will want to consider making the purchase of multi-family residential property that currently is owned by a person who is in a foreclosure proceeding. Of course, unless you have been living in a cave the past eighteen months, you have at least some awareness that foreclosures on residential properties have reached record levels. However, the foreclosure rate has also climbed dramatically when it comes to investment properties, including multi-family real estate.

Naturally, a foreclosure can be nasty business. But, if you are investor who is interested in becoming involved in the ownership of a multi-family property, you actually will find that if you can connect with a property in foreclosure, you can realize what can amount to a significant savings on the purchase price. Obviously, when it comes to investing in real estate, it behooves you to “buy low.”

(As an aside, you actually are assisting the parties involved in the foreclosure proceedings – the current owner, the mortgage lender – by making a pitch to purchase the property. Both of these parties want to get out from under the deal that went south that they have been involved in historically.)

When it comes to considering purchasing a multi-family property in foreclosure for investment purposes, you need to make sure that you have the real estate fully inspected by independent and certified inspectors. Unfortunately, there are instances in which a property goes into foreclosure and then starts to experience what can be serious deterioration. In many, many cases an owner of real estate heading into foreclosure will stop taking appropriate care of the real estate in question.

Finally, before you make an offer on a piece of multi-family real estate that is in foreclosure, you want to make sure that you have access to a bona fide and accurate appraisal of the real estate. In most instances, you will be able to get a reliable appraisal of the property from the home mortgage lender involved in the foreclosure proceedings.

Richard Stephens