Just like commercial real estate properties come in all shapes and sizes, so do their rent rolls. When it comes to purchasing or refinancing a commercial property, the lender always requests to see the rent roll. The rent roll for a commercial property can actually determine how high of leverage a lender is willing to go on a loan. Let’s go through an example to help you understand why this is. 

Imagine there are two identical buildings, one is empty and the other is full of tenants. Of course the one with tenants has a stronger rent roll since it is generating income. Now imagine these same buildings, one has a large tenant that takes up the entire building and the other building has multiple stable tenants. The building with the single tenant is considered riskier because if that tenant leaves, you will be left with an empty building. 

Now let’s imagine both buildings have multiple tenants. One building has short-term lease tenants and the other building has long-term lease tenants. The building with the short-term leases is riskier because the tenants may not renew at the end of the lease term. And when you have multiple tenants with short-term leases, this situation can happen more frequently. Speaking of lease expirations, it also makes a difference to have staggered lease expirations so as to reduce the impact to the net operating income of the property if you do have to find new tenants. 

So remember, the strength of your rent roll can determine the leverage amount of a loan if you are looking to purchase or refinance a commercial real estate property. Evaluate whether the lender sees the property as risky or not based on the vacancy, number of tenants, length of the leases, and staggered lease expirations. 

How To Get Started?

Simple Commercial Capital is here to help you navigate all of the options available if you are looking to buy or refinance a commercial property. Look through the loan programs found at the top of our page. Each program has a brief description and loan parameters. If one of the loan programs fits your needs click the Apply Now button to start the application process or call us at 1-866-554-1120 to discuss your options in more detail. Our goal is to make this process as simple as possible for you.