Q: How are commercial real estate transactions financed in this economy?
A: There are interesting—though sophisticated—options for the savvy investor in this economy. Specifically, loan assumptions and seller-financing arrangements have become increasingly attractive. In response, purchasers—often with the assistance of counsel—are becoming increasing sophisticated in accessing government funding, resulting in creative types of public-private ventures and tax credit financing. The increase in sophistication can likewise increase transaction costs, as negotiating assumptions and second-position seller-financing requires both buyers and sellers to address any transfer restrictions or fees, personal guaranties, and allocations of prior and future environmental and other liabilities. Though long-used, these techniques present modern challenges in light of market realities and changes to forms, laws, and regulations.
Originally published in the Portland Business Journal.