The recent failures of SVB and Signature Bank has caused some investors to question the viability of regional banks. However, before the second and third largest bank failures in history, capital markets conditions and loan portfolios had been deteriorating. A new 

 from MSCI characterizes the state of real estate capital markets as a continuing trend more than an “unexpected shock.”

1. Capital lows declined prior to regional bank failures

Prior to the collapse of SVB and Signature Bank, capital flows declined in the second half of 2022 to $842 billion compared with $1.2 trillion during the same period in 2021, a 30% year-over-year decline. This statistic includes property acquisitions, refinancings and construction loans. What drove this decline in capital flows? Property acquisitions dropped 44% and refinancings dipped 23%.  

2. Sales volumes have dropped precipitously

In February 2023, total investment sales volume declined 51% year-over-year to $26.9 billion. For the 12 months ending in February 2023, investment sales declined by 25% to $683 million. Why? Tighter financing terms and declining property prices have led to lower sales volume.

Higher interest rates increase borrowing costs for investors and operators. According to MSCI, borrowing costs on outstanding property level debt increased 4.4% in December 2022. Investors and operators haven’t experienced this level of borrowing costs since 2013.

4. Banks have grown their commercial real estate lending portfolios

In 2022, banks grew their commercial real estate lending portfolios, which accounted for 48% of new loan originations in the sector. For the five years prior to the Covid pandemic, loan originations totaled 40%. Who were the largest originators of commercial real estate loans in 2022?

5. Regional banks comprised the largest source of funding for construction financing

Regional banks and local banks were the largest sources of funding for construction financing. In 2022, these banks had 29% market share, although new construction loan originations increased to 34% as other lending sources retreated from new project financing. Investor-driven lenders were the second largest source of construction financing. In contrast, national banks held the largest market share pre-pandemic. According to MSCI, regional and local banks financed 63% of originations on new hotel construction and 42% of originations on new seniors housing construction.

6. Regional banks offered higher LTVs relative to other bank lenders

Relative to other banks lenders, regional banks and local banks offered higher loan-to-value (LTV) ratios – at 66.4%. This includes higher LTVs than national banks, international banks, government agencies, CMBS lenders and life insurers. Only Collateralized Loan Obligation (CLO) lenders (74.4%) and investor-driven lenders (71.2%) had higher LTV ratios.

7. Loan maturities are important to monitor, but it’s equally important to parse which enders have loans due

In 2023, approximately $900 billion of commercial real estate loans will mature. Given the uncertain macroeconomic environment, at least some borrowers will struggle to refinance their existing debt maturities. Why? Fewer lenders, higher borrowing costs and tighter lending standards all serve as a potential roadblock to extending the debt horizon. However, not all borrowers are created equally. For example, of the $900 billion of commercial real estate loans, MSCI estimates that $400 billion, or 44%, are held by CLO, CMBS and investor-driven lenders. 

While capital markets remain challenged, capital flows had been declining before recent regional bank failures. Higher borrowing costs, tighter lending standards and fewer lenders have hampered sales volume. That said, for commercial real estate investors and operators, it’s important to parse the data to assess capital markets risk. Headlines often generalize economic doom without discussing specifics on local markets, debt maturities horizons, or individual lender exposure. 

One bright spot: many bank lenders have maturities due in 2026 and 2027, when banks will comprise more than 50% of loan maturities. While some borrowers will struggle in the near-term to refinance their debt obligations, many borrowers who hold bank debt will have a multi-year runway until their debt matures. For the latter group, the prospect of a more favorable economic backdrop, including potentially lower interest rates, is not out of the question.

The State of Real Estate Capital Markets

Whether you’re a buyer, seller, investor or broker, it’s essential that you understand the basics of commercial real estate leases. Before you negotiate and sign your next commercial lease, make sure you understand the answers to some important questions. 

For example, does the landlord or tenant pay property taxes and insurance? Who pays utilities and maintenance expenses? The answers to these questions depend on the type of commercial real estate lease that you are signing. Each type of commercial real estate lease has different requirements for landlords and tenants. When you understand the basics of commercial real estate leases, you’ll be better informed about your expected financial and legal obligations and responsibilities.  

In the article, we will cover five commercial real estate leases that you need to know, including:

What is a gross lease? A gross lease, which is also known as a full service lease, is a type of commercial real estate lease in which the tenant is responsible for paying the base rent. However, the landlord is responsible for real estate taxes, insurance, maintenance, repairs, utilities and other property expenses. 

With a gross lease, the tenant pays rent to the landlord, and the landlord uses the rent payment to pay expenses for the property. Tenants may prefer a gross lease because rent is fixed, and they don’t have to become involved in day-to-day property management. Tenants may also like the downside protection of having a fixed rent cost even if expenses are variable. 

For a tenant, the disadvantage of a gross lease is the relatively high rent. Why? A landlord may set a higher rent for the tenant to offset at least some of the landlord’s expenses. If you’re a tenant, it’s important to understand the terms and conditions of your gross lease. For example, with some full-service leases, tenants may be required to pay a percentage of operating expenses. 

A net lease is another type of commercial real estate lease. Unlike a gross lease, a net lease typically requires a tenant to pay a portion of the property’s operating expenses, which may include utilities, property taxes, insurance and common area maintenance (CAM) fees. There are three main types of net leases:

A triple net lease is a commercial real estate lease in which the tenant agrees to pay rent and utilities, plus all three major operating expense categories: insurance, property taxes and maintenance. A triple net lease, therefore, is net of operating expenses and the opposite of a gross lease. In contrast to a gross lease, a triple net lease may have a relatively lower rent because the tenant pays for operating expenses.

A double net lease requires a tenant to pay rent and utilities, plus two major operating expense categories: insurance and property taxes. In contrast to a triple net lease, the landlord pays for a property’s maintenance expenses. Like a triple net lease, the rent in a double net lease is relatively lower because the tenant is financially responsible for operating expenses in addition to the base rent. 

With a single net lease, a tenant pays rent and utilities, plus one major operating expense category, which is typically property taxes. The landlord pays insurance and maintenance.   

Importantly, while there are standard definitions of triple net lease, double net lease and single net lease, terms and conditions vary by lease. Therefore, it’s essential to read and review each individual lease to understand the respective financial responsibilities between the landlord and tenant.

An absolute triple net lease is a commercial real estate lease that requires the tenant to pay for all operating expenses for the property, including maintenance and repairs. For example, these expenses could include maintenance or structural repairs, such as repairs to the roof. With an absolute triple net lease, the landlord is not financially responsible for the property’s costs. In contrast, a triple net lease requires the tenant to pay for some or all the building’s expenses, with the landlord potentially covering some structural repairs. 

When should landlords and tenants use an absolute triple net lease?An absolute triple net lease is typically used for tenants with a national or regional footprint, excellent credit and the need for a long-term lease. Like a triple net lease, the base rent for an absolute triple net lease is lower than other types of leases.

A modified gross lease is a type of commercial real estate lease in which the tenant pays base rent, utilities and some operating expenses. The landlord pays the remaining operating expenses. Therefore, a modified gross lease is a hybrid model between a gross lease and triple net lease.

A percentage lease is a popular commercial real estate lease for retail businesses. With a percentage lease, a tenant pays a base rent plus a percentage of gross sales. For example, a tenant pays the landlord a base rent of $10,000 per month plus 7% of monthly gross sales. If the tenant generates $10,000 a month in gross sales, the tenant will pay $10,000, plus $700 – or 7% of gross sales – for a total payment of $10,700. The total amount the tenant pays can vary based on the gross sales a tenant generates in each month. Since the tenant is paying rent and a percentage of sales, the landlord pays some or all the property taxes, insurance and maintenance expenses. 

When negotiating your next lease, it’s essential to choose the right lease for your business, goals and growth profile. In addition to basic terms like rent and lease term, make sure you understand who pays for ancillary charges such as maintenance, insurance, taxes, repairs and any other financial obligations. By negotiating these provisions upfront, and choosing the best lease for your business, you can minimize legal costs and related disagreements in the future.

5 Commercial Real Estate Leases You Need To Know

The decision to refinance commercial real estate is important for owners and investors. Whether you want a lower interest rate, more cash or both, refinancing is one solution to maximize profit on a commercial real estate property.

Before you refinance commercial real estate, it’s important to understand the advantages and disadvantages. Here’s what you need to know about commercial real estate refinancing:

What does "refinance commercial real estate" mean?

The process to refinance commercial real estate is comparable to refinancing residential real estate. When a commercial property owner refinances a mortgage, the owner borrows a new loan and uses the proceeds to pay off an existing mortgage. Typically, real estate owners refinance a commercial property to get a lower interest rate, change loan terms, or access cash from the existing equity in the property.

Commercial real estate includes office buildings, retail properties, multi-family housing, industrial properties, data centers and other real estate used for a business purpose. Apartment buildings with more than five tenants are considered commercial real estate even though tenants use the property for their personal residence.

Refinance commercial real estate: key advantages

Real estate owners can leverage several key advantages when they refinance commercial real estate. For example:

1.	Get a lower interest rate. The best way to save money on a commercial mortgage is through mortgage refinancing. When you refinance a commercial mortgage, you can get a lower interest rate, which saves you money each month and increases cash flow.

2.	Change type of interest rate. The macroeconomic environment may influence whether you prefer to have a fixed interest rate or a variable interest rate. A fixed interest rate means your interest rate will never change over the duration of your mortgage. In contrast, a variable interest rate means that the interest rate on your mortgage can change as underlying interest rates change. If interest rates are increasing, then it may be advantageous to refinance your existing mortgage with a fixed-rate loan. However, if interest rates are declining, it may be a better financial decision to refinance with a variable interest rate mortgage.

3.	Change payment terms. Refinancing is also a helpful tool to get more favorable loan terms. For example, when you refinance your existing mortgage, you can choose new loan terms that may offer a shorter duration. While monthly payments will be higher, you’ll pay off your loan faster and save interest. If you prefer to maximize monthly cash flow, you could extend the duration of your mortgage. However, while monthly payments will be lower, you will pay higher overall interest over the life of your loan. 

4.	Access cash from existing equity. A cash-out refinance helps you access cash from the existing equity in your commercial property. Property owners and investors often use cash-out refinancings after making value-added improvements or renovations to a property. With a higher appraised value, an investor or owner can cash out a portion of the increased equity. When you complete a cash-out refinance, you may have a higher mortgage balance. However, you can use the cash proceeds to purchase other properties or reinvest in your current property. You also want to ensure that your monthly cash flow can satisfy your monthly debt requirements.

5.	Extend debt maturities. In comparison to residential mortgages, commercial mortgages have shorter loan terms. While a residential mortgage could be 15-30 years, some commercial property loans may be five to 10 years, for example. This shorter duration loan means borrowers could have a large balloon payment due sooner. To avoid this outcome, borrowers can refinance to extend debt maturities. By restructuring their debt, they can extend their loan duration and push out the due date of the property’s underlying mortgage. 

Commercial real estate refinancing: key disadvantages

While there are several benefits to refinancing commercial real estate, borrowers should be knowledgeable about the disadvantages, which include:

1.	Fees and closing costs. Like all commercial loans, refinancing includes fees and closing costs. You want to ensure that your new interest rate or loan terms outweigh the costs of refinancing your existing loan.

2.	Prepayment penalty. Make sure your lender doesn’t charge a prepayment penalty for paying off your loan early. A refinance loan is considered a full repayment of your existing loan. 

3.	Slow process. Banks may have a slow approval process, which can delay the time required to refinance a commercial property.

Commercial real estate refinance: loan options 

Borrowers have several options to refinance commercial real estate loans, including:

What is a conventional refinance loan? A conventional refinance loan is a mortgage from a commercial lender such as a bank or mortgage lender that isn’t backed by the federal government. With a commercial mortgage loan, lenders allow borrowers to borrow a percentage of the appraised value of the property. For example, if a property is valued at $10 million, and the loan-to-value (LTV) is 70%, this means a borrower could borrow $7 million as a mortgage.

 Banks and mortgage lenders are the primary sources of conventional refinance loans. These lenders may require financial information, credit scores, a shorter loan duration, and more limited LTV ratios. Newer commercial real estate investors may not be able to access as favorable loan terms as more established borrowers.

 Conventional refinance loans are similar to existing mortgages. Borrowers can get a lower interest rate, shorten or extend the duration of the loan, switch to a fixed interest rate or variable interest rate, or change other loan terms.

What is a government-backed refinance loan? A government-backed refinance loan is a private commercial loan that is backed by a federal government agency such as the U.S. Department of Agriculture (USDA) or U.S. Small Business Administration (SBA). Since the federal government backs these loans, there is less risk to a lender if the borrower defaults.

 SBA loans often have owner-occupancy requirements and may have limits on company size to qualify as an eligible small business. USDA loans are available for commercial properties in rural areas. These loans also may require existing equity in the property, and an owner must have owned and operated the property for at least two years.

 Government-backed refinance loans are easier to qualify for than conventional refinance loans. The refinancing process is similar to refinancing conventional refinance loans. 	

What is a commercial cash-out refinance loan? A commercial cash-out refinance loan allows you to borrow a larger mortgage, pay off your existing mortgage, and keep the remaining cash proceeds. This cash is tax-free and can be used to upgrade your existing property, purchase a new property, or for other purposes.

To conduct a cash-out refinance, you need to have significant equity in your existing property. Typically, lenders expect at least 30% equity in your property to qualify for a cash-out refinance. 

 Lenders may offer either fixed-rate or variable-rate cash-out refinance loans. Typically, a commercial real estate borrower can borrow approximately 75% of the appraised value of the property.

Each lender will have its own underwriting criteria to refinance a commercial mortgage. While requirements will vary by lender, here are some key requirements that many lenders will have:

Credit score requirements may vary by lender. For government-backed loans, such as an SBA loan, a business credit score of at least 155 (out of 300) is required. 

Lenders will evaluate your Net Operating Income (NOI) to understand how much cash the property generates. NOI is equal to a property’s gross income less operating expenses. A real estate owner with a higher NOI property generally has a higher chance of approval to refinance a commercial mortgage.  

Lenders want to evaluate books, records and two years of tax returns. The goal is to assess the financial performance and stability of the property. 

Traditional lenders will require a new, third-party appraisal to assess the latest, fair market value of the property.

Lenders will evaluate the property’s cash flow to determine how much cash flow can be applied for debt service. A higher debt service coverage ratio (DSCR) provides a lender with more confidence that the mortgage will be repaid.

When you refinance commercial real estate, you should expect to pay multiple fees, which could include:

The Ultimate Guide to Refinance Commercial Real Estate

When applying for a business loan, lenders might ask applicants to sign a 

 stating that they’ll be personally responsible for the debt if the business defaults on the loan. This document means that the business owner must pay back the loan from personal assets if the business is unable to pay back the loan.

When you take out a mortgage on a home, the value of the home itself ensures the lender won’t absorb all the costs of default. Lenders like to have some assurance that they won’t lose money if you’re unable to repay the loan.

When are Lenders Likely to Ask for a Personal Guarantee?

There are several reasons why a lender might ask a small business owner to sign this type of agreement, including:

The Pros and Cons of Signing a Personal Guarantee

Unsurprisingly, the major pro is the business can get the loan they need! It may be the only way some business owners qualify for a loan, so it can be a window to funding when it may be desperately needed.

On the flip side, personal guarantees are difficult to get out of, so even if the business gains assets to back the loan, the owner could still be held personally liable for loan default. 

Does Registering as an LLC Mean You’re No Longer Personally Responsible for Personally Guaranteed Debt?

People often register their business as a limited liability corporation (LLC) to limit personal liability for debts or judgments brought against the business. However, the ‘limited’ applies when a personal guarantee has been signed. The personal guarantee provides a kind of bridge over the LLC so the lender can access personal assets to pay back the loan.

If you’re a business owner facing down a personal guarantee and unsure whether it’s right for you, 

Defining the Personal Guarantee

The term property class typically refers to a system of grading
that can give a 

 investor an idea of the quality of the property at a glance. These quality classifications translate to the level of risk and return a property
represents to an investor. Properties are classified based on several factors such as:

 aren’t set in stone – renovations or upgrades may bump a
property up a grade. Some real estate investors use more intensive metrics to determine property class, some grade from A-F instead of just A-C, and some may use subclassifications to demonstrate the grade of properties within a class.

Class A properties tend to be less than a decade old and well-maintained. They are typically turn-key; they don’t require any renovations or updating to demand high rents and bring in upscale, high-income tenants. They’re the highest quality properties in their area, and the areas where Class A properties can be found are typically affluent. Class A properties that are serving as rentals are typically professionally managed to ensure the property stays in great condition. 

Class B properties tend to be a little older, not quite as well-maintained, possibly in need of upgrades, or with small issues that need to be addressed. These properties are often found in good areas but not great areas. They may be owner-managed or professionally managed. 

Class C properties tend to be fixer-uppers. They are often 20 years old or older, located in less affluent areas, and may have visible maintenance issues and wear and tear. Vacancy rates are typically high and tenant income is typically low. Due to the condition of the properties and less desirable locations, Class C properties tend to be considered highest risk to investors. 

Understanding property classes and what they mean regarding commercial real estate investment is a key lesson for investors, whether you’re investing in income properties or property for your business. Unsure of your property’s class or what it might mean if you decide to use a sale-leaseback to gain access to capital? Feel free to 

Defining Property Classes

Strong U.S. economic growth means accelerating commercial real estate transactions. 

Of course, this is good news for industry professionals, but the workload associated with this boom can be overwhelming. At Keyway, we designed our net-lease platform to work with real estate agents to help them close deals faster and easier, increase their commission volume and build a long term relationship with us.

⁠We are principals specializing in net-leases for single-tenant properties under $10M. Our initial solution is an easy, fast and simple sale-leaseback solution for medical operators, including veterinary and dental, across the United States. 

⁠Keyway offers the simplest way for small and medium-sized businesses to enter a net-lease. Start the process on behalf of your client completely online or talk directly to a member of our real estate team. Keyway then submits an 

 to you and your client within 48-hours with clear terms.

After signing an LOI, you and your client can access our online deal room to complete and track all necessary steps to complete the transaction. No more endless email and red line traffic, keep your client on task with our digital workflows. We perform a straightforward due diligence process with only one property visit to ensure 

Have a client looking for a buyer? Start the process online 


⁠Want to talk to our team to learn more? 

At Keyway, we know the faster and easier we move the more likely you are to come back to us over and over again. We can’t wait to work with you and show you why Keyway is your client’s ideal buyer.

How a Real Estate Agent can Benefit from a Partner like Keyway

If you’re thinking about making a real estate investment, here are the most important terms and metrics to know. 

 (NOI) essentially refers to the money you make from a property, and it’s one of the easiest metrics to calculate on your own. You simply subtract your operating expenses (excluding mortgage payments, business taxes, and interest) from your total yearly income. 

 (GOI) is calculated by subtracting the estimated cost of vacancies or non-payment from the gross potential income (i.e. how much the property could make if units are full year-round).

Arguably one of the most important real estate investment metrics, cap rate, or capitalization rate, shows the potential return on a property. You can find the cap rate by dividing the NOI by the property’s cost. Generally the lower the cap rate, the less ‘risky’ the investment. 

If you’ve ever taken out a business loan, this one will be familiar. To find the LTV, you divide the loan amount by the property to produce a ratio. For reference, the majority of lenders require an LTV of 65%-80%. As an example, an 80% LTV requirement would mean that a loan seeker would need to either purchase the property at 20% below its market value or have a 20% down payment in hand.

 (IRR) can help investors judge a property’s ability to turn a profit. It takes into account several factors to provide a fairly accurate picture of whether a property is making money or not.

Cash on cash return (CCR) is a way to evaluate how an investment is performing. It divides the before-tax cash flow by the total cash invested to show how much money the invested cash is bringing in. This metric isn’t perfect by any means since it leaves any debts and other expenses out of the equation.

Also known as debt coverage ratio (DCR), 

 (DCSR) shows whether a property is bringing in enough to stay in the black. You find it by dividing NOI by annual debt service. A DCSR rating of less than 1 shows that a property has a negative cash flow and can’t cover expenses.

This metric can help investors get a picture of how much it will cost to operate a property so they can judge its value as an investment or compare it to other potential investments. It can also help gauge how well property management is handling expenses and keeping cash flowing in. To calculate the 

 (OER), you divide operating expenses by the potential rental income. 

Gross rent multiplier (GRM) divides a property’s value by gross rents to compare a property’s income potential to similar properties. You can use this formula to estimate the price you should pay for a property, as well.

Being familiar with these metrics can help make the journey into real estate investment so much smoother, from the bank to the brokerage to running your business every day. Need help understanding what these metrics mean for you as you look to pull cash out of your commercial real estate investment? Feel free to 

Real Estate Investing Metrics

Whether you’re buying or selling commercial real estate, closing costs will be part of the transaction. The good news is you can prepare for what to expect so that when it comes time to sign the deal, you — and your bank account — will be ready.

Closing costs are the fees paid for services that are needed to complete a real estate transaction. This could be a residential home, a commercial property or a piece of land. These costs become due when the buyer’s funds become available as payment for the property and both parties have signed the transaction closing documents — usually on closing day.

When it comes to commercial closing costs as opposed to residential, sellers are most often responsible for closing costs. Commercial closing costs typically include the following items.

. The asking price for a commercial property can be tricky to figure out, and a professional real estate appraiser can be a big help in this process. Often, you might pay 

 for an average-sized commercial property appraisal, but this can be 

. Both a seller and buyer of a commercial property can have their own licensed commercial inspection performed to address any concerns about issues with a property’s condition. This can help with pricing and negotiations.

. Generally, property repairs consist of issues such as electrical or mechanical systems in occupied areas along with any problems in the building’s exterior and common areas, like the bathrooms and roof. The inspection report will come in handy when deciding what to do here.

Other commercial property closing costs include:

Closing Costs: What they are and who pays

The COVID-19 pandemic changed every aspect of our lives from the way we live, to the way we work, to how and what we buy. These everyday shifts changed the way we interact with the world, including the use of commercial real estate in the U.S.

Here are commercial real estate trends we’re following:

New Normals Lead to High Demand for Healthcare Real Estate

COVID-19 brought extremes for the healthcare industry over the past couple of years leading to many changes, including an increase in demand for healthcare real estate. For one, telehealth is on the rise. Despite what you may believe, telehealth does not reduce the amount of office space needed for healthcare practices. According to 

 telehealth acts as a supplement to in-person care and not a replacement, which means there will be the same amount of patients accessing healthcare facilities. Instead, administrative areas will be reconfigured to allow for maximum telehealth appointments, explains 

 is a location change needed for facilities in lower-cost, off-campus facilities that are closer to where patients are living. This means a greater focus on areas outside of urban cores, as well as an increase in demand in the sunbelt where there is a rise in population for the sunny weather, a lower cost of living and an increase in job opportunities, according to 

Due to COVID-19, many healthcare businesses were closed or unable to do elective procedures for the majority of 2020. As a result, owners of healthcare businesses have less cash on hand than after a typical year of business and are currently having to get creative in terms of capital that can be used right away. This is leading to an increased interest in sale-leasebacks in the medical real estate space, according to 

. Sale-leasebacks allow for healthcare companies to stay in their facilities by leasing back their own property, with an influx of capital in hand. This newly gained capital allows for more nimble business decisions including  opening up additional locations to keep up with market demands.

E-Commerces leads to massive Industrial Demand

COVID-19 brought a tidal wave of e-commerce flooding the retail space, leading to one of the biggest shifts in retail in U.S. history. This large-scale shift to e-commerce has resulted in a much higher demand for industrial real estate. Storage, warehousing, and logistics are now a top concern for retailers, with 

 noting that suppliers are increasing from keeping an average of a 15-day supply to a 60-day supply to help with supply chain disruptions and demands. There is also to be an expected 250 million square foot increase in warehouse space in 2021. 

This new, high demand for industrial spaces is bringing an increase in CRE investment to industrial properties, as well as an increase in retail-to-industrial conversion projects.Thanks to retail to industrial real estate being the fastest growing conversion category of real estate, for business owners with this kind of property, now is this time to cash in to receive maximum value for the property, according to 

For retail owners going through the e-commerce growing pains themselves, selling to an investor like KeyWay provides the ability to continue leasing your own space, while gaining capital to expand your business in the necessary ways that e-commerce presents whether that is acquiring more industrial space or getting ahead on inventory.

Quality Design Takes Precedence in Offices

While it is too early to tell what the exact long-term effects of COVID-19 will be, we know office spaces will be used in a fundamentally different way than they were before. With the rise of remote and hybrid work, stats show a potential 15% decrease in overall square footage of office space needed in the U.S., according to 

. Instead of the historical focus on square footage, office spaces are being reimagined as places for companies to meet and collaborate, not for individual work. 

However, COVID-19’s impact on office space is dependent on location with the sunbelt faring the best because it continues to attract investments, according to 

 The sunbelt, including U.S. southern and western metropolitan areas, are the most popular destinations for investments with Dallas, Houston, Atlanta, and Austin all being at the top of the list ​​because of their multifamily, industrial, and retail property markets, according to 

Keyway is simplifying how commercial real estate works for small and medium-sized businesses. Whether you want to open a new location or sell an existing one, Keyway’s solutions combine data, intelligence and capital to help you achieve your goals. 

Commercial Real Estate in 2021: What We're Watching

Whether you’ve just finished dental school and are deciding on the first step of your career path, or you’re a seasoned dental associate trying to decide your next move, you might be considering whether dental practice ownership is actually the right decision for you. Of course, there’s no right or wrong answer and it really all comes down to who you are and what your goals and plans for the future look like.

There are many pros and cons to remaining a dental associate and not owning your own practice or taking that leap into ownership. Here are some considerations to make in this very important crossroads that will hopefully get the juices flowing and lead you to 

Pros of Not Owning a Dental Practice and Remaining an Associate

. Dental associates typically only have to worry about providing dental care to their patients - the exact thing they were trained for and hired to do. On the other hand, many dental practice owners are, by default, also the recruiters and managers of their dental associates and other staff members. This doesn’t often reduce the time they spend practicing dentistry (nor do they necessarily want it to), but there are of course only so many hours in a day.

So, if you go down the practice ownership route, you need to take the time to learn and be comfortable with these practice management tasks along with your regular duties, which can be quite time-consuming.

. Dental associates will generally have more freedom and flexibility to leave their jobs for further education, relocation opportunities, or other career moves, whereas practice owners are much more tied to the specific location in which they set up their practice. Selling, moving, or shutting down a practice can of course be done, but it often requires a lot of time, effort, and money. 

. When it comes to service quality, office maintenance, financial management, and everything else that comes with practice ownership, dental associates are often not involved, or at worst very minimally responsible. This frees you up to focus on what you do best - providing dental care to patients - and reduces stress in your day.

Cons of Not Owning a Dental Practice and Remaining an Associate

. Depending on the type of person you are, you may have somewhat of a tough time working for someone else and operating under their rules. Know that when it comes to decisions for the practice, including the techniques employed, who to hire, and what equipment and supplies to purchase, it’s possible that your input might not be considered or valued. You also might not have much or any say about how much time each patient gets and what services you provide.

. When you don’t own your own practice, it’s likely that you won’t have much, if any, say about your hours and work schedule. Bottom line, your employer will need to schedule shifts for dental associates and other staff members according to their needs.

. As a non-owner, you’ll be taking home a salary, not profits from the practice. With an average salary of 

, this means dental associates can do quite well relative to a slower or less profitable year. However, if you’re particularly financially driven, you might find it disappointing to know that you could have earned more in a successful year as a practice owner.

Whichever career route you choose to take, keep in mind that sometimes you won’t know what’s truly best for you until you take the leap and try it out. Whether you decide to take the leap or hold out a little while longe, Keyway can help you understand how and when to use real estate to achieve your goals. 

Is Dental Practice Ownership Right for you?

Whether you're considering or just want to know more, a sale-leaseback is a fairly common real estate transaction that allows you to sell your property without having to move your business. 

A sale-leaseback is a transaction that occurs when an owner sells an asset and then leases that asset back from the buyer, usually for a long period of time. This means the owner can continue to occupy a property once they’ve sold it to their new landlord — they now become the lessee and the buyer becomes the landlord.

It is a fairly common transaction, US sale-leaseback net-lease volume is $8-$10B a year. (CREXi)

If you’re trying to figure out whether a sale-leaseback is right for you, there are many benefits to consider. As a 

Of course, like anything else, there are some drawbacks to sale-leaseback transactions. Keep in mind you will probably face some tax and business implications, as well as time and money invested in executing this transaction. These things are different for everyone and depend on your jurisdiction, so you should discuss them with professionals, such as your accountant and real estate agent.

Sale-leaseback transactions often happen between commercial property owner-occupants and real estate investors. First, the owner-occupant sells its asset to the investor, which then leases it back to that original owner usually in a long term (10+ year) lease. The seller now has capital freed up for other purposes, and the investor has gained a cash-flowing asset which helps them diversify and expand their income.

Overall, sale-leaseback transactions can make a lot of sense for both sellers and buyers. If you’re interested in learning more about whether a sale-leaseback is right for you and how they might help you achieve your goals, give Keyway a shout.

Defining the Sale-Leaseback

Working with a commercial real estate broker can be the best way to ensure you’re getting the best price for your business space - whether you’re leasing, buying, or selling commercial property. Here are the basics of what you need to know to work well with a commercial real estate broker.

What Kind of Experience Do Prospective Brokers have?

In an industry that is ever-changing and full of complicated concepts, it’s important to know that your broker knows what they’re doing. Find out how much experience brokers you’re considering have and find out where they’ve worked. A broker with local experience will have a handle on the local market and may have contacts that can help you find a better deal. It’s also a good idea to ask what kinds of commercial real estate they have experience with.

One of the best ways to decide if a broker is the right one for you is to ask. Ask brokers you’re considering for references from past clients and actually follow up with those references. You can also ask business owners in your area and/or industry about their experiences with their broker or if they have anyone they recommend.

Here are some tips for getting through the property buying or leasing process with your broker. This process typically starts with pre-shopping paperwork and discovery, then moves on to property viewings, making an offer, negotiations if that offer isn’t accepted immediately, and then the closing process.

Your broker doesn’t expect you to know everything you need to know about leasing, buying, or selling commercial property. It’s why you hired an expert! They’re your representative and 

A good broker wants you to be well-informed - they should be able to tell you about market trends, rent assumptions or even what a CAP rate means. 

There’s a whole lot of paperwork involved in real estate, and your broker will need copies of lots of documents. If it’s not offered, ask your broker to give you a list of the documentation needed so you don’t have to scramble for it when it’s time to get down to business.

If you’re buying or leasing, it’s important to figure out what you need from a property before you start looking. How much space do you need? What type of layout would work for your business? Do you have a particular neighborhood that’s best for your business? 

Your broker can usually help you identify factors to help you narrow down your list of potential properties. They may also be able to help you find potential in a property that didn’t seem quite right.

The whole point of working with a commercial real estate broker is that they make your search for the right property easier and more efficient, and they serve as an advocate for you in any real estate transactions that take place. If you choose the right broker, they’ll do all that and more.

At Keyway, we’re happy to work with the real estate professional of your choice, so you can achieve your goals.

Feel free to have your real estate professional reach out directly to us on your behalf. 

How to Work with a Commercial Real Estate Broker

If you’re considering a loan for your business, it’s absolutely crucial that you do your research and due diligence before embarking on any application. Since the process can be long and detailed, you don’t want to go through the pain of it without knowing the loan itself is aligned with your goals and plans. 

You’ll want to start by clearly identifying your specific purpose for the loan. Are you growing and looking to hire more people or open another location? Maybe you need to invest in a new technology to get ahead of the market? Then, make a solid plan that includes the specific dollar amount you’re seeking to make these dreams a reality. You’ll also need to think about the timeline you need to pay back the money you’re borrowing. Once you have this in place, review these different kinds of business loans to discover what might best suit you and your business.

Business lines of credit are super flexible and typically available within a week or so. The nice thing about this type of loan is it’s revolving, so you can access the funds more than once as you pay it down (and you only pay interest on what you spend). Business lines of credit usually range in the ballpark of $1,000 to $500,000. You’re likely looking at an interest rate of about 8-24% and a year or two maturity period.

The Small Business Administration (SBA) is a federal agency that assists small businesses that can’t get help elsewhere in finding needed funds and resources. These types of loans go from $50,000 to as much as $5,000,000 and terms are often 10-25 years. You’ll need to plan for a lengthy process and time frame before accessing funds from this loan. 

If you’re under a time crunch, in a high-pressure situation, basically in need of funds yesterday, a short term loan could be your saving grace, provided you don’t need more than about $500,000. Once your application is submitted, you could have a low-interest (think 8% or so) loan as quickly as 24 hours. Keep in mind, as the name says, these are meant for the short term, so they need to be paid off quickly — usually within three years.

For decades, businesses looking to borrow money have used business term loans as a very reliable, quick, popular, and cheap method (fixed interest rates go as low as 6%). These loans are used for anything from expansion to working capital acquisition to equipment purchases, range from about $5,000 to $2,000,000, and can span anywhere from 1-5 years.

The table below outlines some other types of business loans you might want to explore, along with their approximate amounts, interest rates, and terms.


If you own your commercial property, another option is to enter into a sale-leaseback with Keyway. In a sale-leaseback, you would sell your property, get cash for your growth needs, and remain as a long-term renter in the same location. Contact us to learn more!

Transition Out

Sell & Stay

Expand

Rent-to-Own

Multifamily Owners

Doctors in Private Practice

Dentists in Private Practice

Veterinarians in Private Practice

Resources