Between civil and political unrest, Covid-19’s impact on the health and well-being of the nation, and the unprecedented economic impact of the associated shutdowns, 2020 has been a very memorable if unpleasant year.
The federal and state governments have gone to extraordinary lengths to try to enable citizens and businesses to survive economically, with programs ranging from the federal unemployment payments, stimulus checks, PPP and disaster relief loans, etc. However, there looms a very long road back to any semblance of the pre-pandemic economy, and the real estate industry is the perfect example of the complication and duration of that road.
Programs such as eviction moratoria are a great and necessary short term solution to keep people from being put out in the street. However, those tenants find themselves in an unmanageable situation when the moratorium ends, with a mountain of unpaid rent that must be satisfied. On the other side of that equation is a landlord that has not collected rent but has still been obligation to make mortgage, insurance, real estate tax, and other payments as well as continue to maintain the property. Failing to do so simply creates more debt with a short time fuse attached.
Apply this scenario to a piece of retail oriented real estate and the long term prospects become even more uncertain, and that is putting it politely. There are obviously not lines of eager tenants waiting to lease property for storefronts, restaurants, or bars, so landlords are in tenuous positions everywhere. Mortgage debt must be paid. Real estate taxes must be paid. Eventually, the piper must be paid.
This all sounds very bleak, but with the right leadership and patience all the way around the table, there will be solutions. What will arise from this is not only creative solutions to these problems, but perhaps a whole new set of innovations in real estate that will propel the industry for many more prosperous years.
Private lenders like Silver Arch Capital Partners offer sound alternative solutions to conventional financing in difficult times. Reach out to a loan officer at 201-254-2555.
