Negotiating a purchase price is only the beginning. The financing also has to accommodate the property’s condition, the buyer’s qualifications, and the cash needed after closing. A willing buyer and seller can find themselves stalled when one of those pieces falls outside a lender’s requirements.
A lender’s rejection can feel final, leaving buyers scrambling for financing before less conventional possibilities have been explored. Yet the obstacle may involve more than income or credit. Commercial lenders may also assess a buyer’s experience with the asset class, while the property’s condition can affect which financing programs are available.
Buyers might need to conserve cash for improvements. Sellers may be open to receiving their proceeds over time. From my perspective, those circumstances give us something to explore. For smaller investors or those purchasing their first investment property, securing workable financing can require resourcefulness.
A seller’s contribution toward closing costs could help a buyer preserve cash for needed repairs. Sometimes negotiating a higher purchase price alongside that contribution may help accommodate both parties’ needs, provided the appraisal and lender’s requirements support the arrangement.
A seller willing to carry part of the purchase price may help bridge a financing gap while earning interest on the amount owed. That interest is a potential reward for accepting repayment risk. The buyer’s ability to pay, the seller’s security, and the repayment schedule all need careful consideration, particularly if the seller’s note sits behind a bank loan.
Understanding underwriting guidelines and discussing the proposed structure with lenders are essential parts of this work. A seller comfortable with the terms may find the exchange worthwhile. A broker who understands the numbers and is willing to propose an unconventional approach can help both parties explore what is possible.
Deciding when to act
Financing is one consideration. Deciding when to act is another.
It may be tempting to put plans on hold until the market improves. Before doing so, it helps to define what improvement would mean for your plans—and what waiting might cost.
At Cygnus, we believe different markets present different opportunities. If you are open to exploring them, you “might find what you need.”
Fewer competing buyers can offer more negotiating room. Fewer competing listings may help a seller attract attention to a property that otherwise might be overlooked. An owner selling one property to purchase another has both sides of that equation to consider. A concession on the sale could be offset by an opportunity on the purchase.
Selling at the top of the market and buying at the bottom is a great idea. Getting the timing to work that neatly is another matter. In 25 years, I have only seen it happen once, and it was pure luck on both my part and my client’s. I wish I could take credit for engineering it, but I cannot.
Waiting may make sense for some. Continued ownership brings expenses, maintenance, and demands on your time. It may also bring income and room to improve the property’s position. Those considerations deserve a place alongside predictions about rates and prices.
For others, retirement, an expanding business, or a property that no longer serves its owner can give the decision its own timetable. A move may be worthwhile before broader market conditions become more favorable.
We can’t control market conditions, but we can decide how we deal with them. Part of that decision involves looking beyond the broader market to understand what is happening in the particular community where we own—or hope to invest.
The summer season and beyond
Here in Northern Michigan, our relatively limited supply of commercial properties offers some insulation from wider market swings. Changes in financing and buyer confidence still reach us, but we are not working through a glut of available properties.
A buyer I spoke with recently offered another perspective. They were becoming more comfortable with the idea of investing in Traverse City because they could see and feel the area becoming more of a year-round destination.
For businesses and property owners accustomed to planning around a strong summer season, a broader calendar of activity could create opportunities to serve customers, support tenants, and generate income beyond the traditional peak months. Evaluating that possibility means looking at what sustains activity throughout the year and how a particular property or business might participate.
There is another part of investing here that deserves attention: understanding the local culture. Northern Michigan communities have longstanding relationships, habits, and expectations that may not be apparent on a first visit—or in a set of financials.
Newcomers, sometimes referred to locally as “move-ins,” can encounter resistance, particularly when they arrive with plans to change things before understanding why those things exist. An improvement that seems obvious to an investor may look quite different to the people who live, work, and do business here.
Spending time in the community and listening to customers, neighboring businesses, and year-round residents is part of learning the market. What do people value? What would they welcome? What might they feel they were losing?
Understanding those answers can help an investor recognize opportunities and approach changes with greater care.
What experience can uncover
Could there be more to value than just the income and property?
Lease terms, financing possibilities, and local knowledge may broaden the conversation about how a sale could work—and how a property should be presented to prospective buyers.
At Cygnus Partners, we draw on our experience in commercial real estate and business brokerage to help owners recognize those possibilities. That work includes understanding the numbers, asking a few unconventional questions, and considering how the property fits the people and community around it.
Whether you are considering retirement, expansion, or a different direction, you do not need a listing date on the calendar to give us a call. Let’s talk about your property, what you hope to accomplish, and how we could position it in the market to bring its strongest assets into view.
