#6 Length of Tenancy

Number six on the list is that the property leases are not long-term but are month to month

This blog will probably be the shortest of the ten.

Very simply the longer the lease term the more comfort the lender has with the project. Month to Month tenancies, where the tenant has to give the landlord only a thirty day notice to vacate do not give lenders comfort.

Long term leases on the other hand give a high comfort level to the lender that the projections and the actual rent roll presented to the lender in the underwriting process should remain intact.

What is considered long term. A minimum of five years is what the lender is looking for these days. A Year to Year tenancy - if the tenants have been there for many years and they have a consistent pattern of renewing their lease every year that may be good enough. Especially if we are talking about commercial tenants. Commercial tenants have a tendency to stick around a lot longer. They have made their business presence known in the community and they do not like to move about, unlike residential tenants where any change can cause them to move.

Less than thirty day tenancy is no even considered!

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