Strip malls or mini-malls that cater to a small residential area are bound to be affected by the slow down in the economy and the housing crisis. They may be as small as 5,000 square feet and the small ones are often found at the intersection of the main streets in a small residential area. It usually has a small restaurant, a video rental store, a grocery store, a dry cleaner and other establishments that serve the needs of a small community.
Unfortunately, there is a possibility that the foreclosures may have reduced the population that a particular strip mall had been serving. On top of this, the residents are likely to have reduced their shopping budgets because of the crisis and the increase in the number of people without jobs.
There is a need for strip mall loan modifications because the owner, which is usually a business enterprise, may have been delayed in the monthly mortgage payments as a result of the decline in sales. This may be triggered by the failure of a large number of the commercial enterprises renting in the strip mall to pay their rent. Moreover, some of the tenants may have shut down their operations or transferred to another location. With this situation, the strip mall owner will have difficulties in coming up with the monthly payments. Thus, there is a need to restructure the loan to make the payments more affordable.
Strip mall loan modifications may also be needed as the end of the loan term approaches where the owner has to make a balloon payment. This means that a large amount, which is the outstanding loan balance, has to be paid at the end of the term and it is common for the owner to seek another loan or to find a buyer for the property.
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Cool read, thanks a bunch for the article.