Lumicre partners with local and national banks to effectively manage, lease, and oversee profitable sales of Real Estate Owned (REO) properties, Other Real Estate Owned (OREO), or properties obtained in bankruptcy proceedings. Whether you’re looking for commercial property management or you want to dispose of commercial real estate, we can help you find the best options for your business.
Banks and lenders have several options after they acquire relinquished commercial properties. Determining the best option requires careful consideration.
Together with the financial institution, Lumicre can help determine which option is the best business strategy. Then, we can successfully identify any problem areas the property might have, update or renovate existing buildings, manage current and potential tenants, provide necessary audits, and aggressively market the property for maximum turnaround.
From start to finish, Lumicre helps financial institutions navigate the challenges surrounding REO properties.
Contact us today to learn more about our commercial property management services and commercial real estate sales brokerage, including REO lease-up, property management, and disposition.
The Ins and Outs of REO Commercial Real Estate Properties
With an economic downturn comes collateral damage. The extraordinary events taking place in our world have caused sharp sales declines in all industries. As a result, many businesses are in turmoil, unable to pay their rents. Therefore, property owners can no longer repay their loans, eventually leading to bankruptcy or foreclosure.
From start to finish, Lumicre helps financial institutions navigate the challenges surrounding REO properties.
Initially, financial institutions may agree to a short sale of the property, or try to sell the property at a foreclosure auction. If these are unsuccessful, the financial institution takes ownership of the property. These foreclosed properties, known as Real Estate Owned (REO) or Other Real Estate Owned (OREO), become the responsibility – and liability – of the bank or lender.
If you are a lender who has recently acquired a relinquished property, you might be wondering about your options.
REO Properties: Your Options with Commercial Real Estate
Upon foreclosure of a commercial property, the bank or lender will take ownership of the property. Depending on the property type and class, as well as the location and surrounding CRE market, banks have several possibilities.
Sell Property As-Is
In a strong economic market, banks may choose to sell REO properties as-is, making minimal financial investments in renovations. At the very least, make any necessary repairs and fix any glaring problems. Investors are much less likely to purchase a building that is visibly deteriorating.
However, before making any decisions about your REO property, you should have a firm understanding of the property’s value. Determining the market value of a commercial property can be complicated. Unlike residential real estate, commercial property valuations are based on several factors, including the building’s vacancy rate and future earning potential.
An experienced CRE broker can help you determine the property’s value and help you determine whether selling the asset is the right financial move.
Hold and Lease Until Market Value Increases
In a sluggish market – or an economic downturn like we’re currently experiencing – selling the REO property may not be the wisest financial decision. Instead, the lender may choose to hold the property until market value increases.
Hiring a property management company can help minimize your losses while maximizing income from REO properties.
Of course, in this case, owners of the REO commercial real estate will incur costs to renovate the property, make improvements, and hire a capable management team to find high-quality tenants.
The key here is to limit your financial expenditures while maximizing income from tenants. Those holding properties until the market recovers may choose to make minimal improvements while still meeting tenants’ needs.
Hiring a property management company can help minimize your losses while maximizing income from REO properties. At Lumicre, we can help manage your commercial properties, suggesting necessary improvements that will increase your property’s value. We will also identify and seek out high-quality tenants that can increase your monthly earnings and increase the overall property value.
In many cases, investing in building improvements can increase the value of your property in several ways.
Improvements will attract new tenants or more potential buyers. Technology improvements, for instance, can make the property more competitive with others in the area. When up-and-coming businesses look for a space to lease, they’re more likely to choose a renovated space with technological advances.
Even minor repairs, like cosmetic improvements, can increase your desirability and property value.
Increased desirability means increased rent rates. Lower vacancy rates mean higher property values. All of it means more profits for you, the owner.
Hold as an Income-Producing Asset
Some financial institutions choose to hold REO commercial properties indefinitely, creating income-producing assets over time. In this instance, the bank or lender takes ownership of the property, assesses the property’s current value and the potential for future earnings, and then makes improvements to draw in new tenants.
This option allows financial institutions to hold a property until it recoups its costs and achieves a stabilized property value.
With this option, the bank or lender could make significant investments in a property to improve infrastructure, modernize technology, and make it more attractive to tenants. By increasing the property’s occupancy, you’ll increase its overall value, therefore recouping investment costs and costs incurred during the foreclosure process.
Foreclosed Properties and Property Management
Whether you choose to sell an REO property immediately or hold until market value increases, you’ll want to maximize your earnings. As such, it’s essential to assess every aspect of the property’s value and make necessary improvements to increase earning potential.
Commercial property management companies like Lumicre can assist financial institutions in every part of OREO/REO property management, from audits and renovations to leasing and tenant relations.
And when you’re ready to sell, we will work closely with you to develop a plan. Together, we will get the property sold in the shortest amount of time at the best possible price.
Lumicre Commercial Property Management
For more than two decades, our team of experienced and dedicated brokers, property managers, and staff have worked to secure a name as one of the leaders in the CRE industry. We value our clients and are determined to provide you with the best possible outcomes for your real estate investments.
At Lumicre, our success depends on three pillars:
- Deal Speed
If you’re ready to sell your REO property, Lumicre will help you offload it quickly, at the best possible price. Our team identifies qualified investors and works to close the deal as soon as possible.We use the industry’s latest technology to connect with investors and get your property sold fast. - Knowledgeable and Capable Talent
Our exceptionally talented team sets us apart from the competition. We recruit experts in commercial real estate sales and property management, creating a world-class group of CRE professionals. Moreover, they’re ready to serve you, whether you decide to sell or lease your REO property.
- Tenant-Centric Operations
Our third and final pillar makes us unique in our industry. We prioritize tenant satisfaction above all else because we know that when your tenants are happy, you maximize your returns. That’s why we go out of our way not only to find high-quality tenants for properties but also to provide exceptional service to keep them satisfied. Happy, long-term tenants are critical to a profitable CRE investment.
Our REO Commercial Property Management Services
Whether you choose to sell or hold your REO property, Lumicre offers services to help you maximize your returns. Our highly experienced team of brokers and property management experts can help you navigate the challenges that come with REO properties. From acquisition to disposition, we can manage the process for you.
Whether you choose to sell or hold your REO property, Lumicre offers services to help you maximize your returns.
Comprehensive Property Analysis
When you take ownership of an OREO / REO property, you should have a rough estimate of its valuation. Past appraisals, made at the time the property owner applied for a loan, should indicate the building’s estimated value.
However, market values can change quickly. High vacancy rates, current economic trends, and local CRE values can all impact the property’s current value.
Therefore, our CRE broker professionals will do a full evaluation of your property, giving you a detailed analysis of its value. We will compare your property to surrounding submarkets, analyzing trends that can help you determine whether or not to sell.
Create a Plan for the OREO / REO Property
Once we assess your property’s value, we will work with you to create a plan. If you choose to sell, we will create a detailed disposition plan to get your property sold for the maximum price in the shortest time.
Should you decide to hold the asset, we can discuss property management options and improvement plans to match your financial goals.
Property Inspection, Improvement Plans, and Renovation Oversight
Many foreclosed properties are in some state of disrepair. We will inspect your property and suggest improvements based on your goals and budget. We will identify necessary fixes to bring the property up to code, as well as suggest potential renovations that could increase your building’s allure to prospective tenants or buyers.
Once you have approved improvement plans, our team can handle every aspect of the construction and renovation.
Leasing Services and Property Management
Should you choose to hold the REO property, our dedicated and experienced commercial property management team is there to help. We will work closely with existing tenants to negotiate leases. Then, we’ll market the property aggressively, finding high-quality tenants who will add value to the property.
Using our tenant-centric approach, we will ensure your renters are satisfied, keeping them leasing longer, therefore driving up your profits.
Whether your REO property is commercial, office, medical, industrial, multifamily, or another type of CRE, our property management team has you covered.
Our property management services are comprehensive, and include:
- Tenant communication and lease negotiation
- Identifying and marketing to potential tenants
- Building operations and maintenance
- Construction and renovation management
- Financial reporting
REO Property Sales
The Lumicre brokerage team is ready to help you sell should you decide to offload your REO commercial real estate property.
Our respectfully aggressive approach seeks out potential buyers and investors. We don’t wait for them to come to us. Using every tool at our disposal, we will market your property, answer all communications promptly, and schedule same-day showings to get your REO property sold fast.
Plus, our experienced staff have a network of valuable connections, giving us first-hand access to unique investment opportunities. Thousands of investors visit our website each month. We will highlight your property on our website as well as all the major CRE sales platforms.
Our respectfully aggressive approach seeks out potential buyers and investors. We don’t wait for them to come to us.
Bankruptcy Trustees: Disposition of Assets
During bankruptcy proceedings, the courts name trustees to gather remaining assets, dispose of those assets, and use the proceeds to pay creditors. If you’ve been named the trustee of commercial real estate or other real estate properties, we can help you navigate the process.
Bankruptcy law can be complicated, but our expert brokers have experience dealing with bankruptcy trustees. Our highly knowledgeable brokers will work with you to explain the process, find the best solution, and offload these assets on your behalf.
After disposing of these assets, the trustee will pay off any debtors named in the court proceedings and will keep a portion of the profits as payment. Therefore, Lumicre focuses on selling foreclosed properties for the best possible price to help you see maximum profits.
Contact a Lumicre broker today to discuss your options.