Thursday, June 20, 2013

It's not always collateral

Barbados is a lovely island with some phenomenal properties. Some time ago, a client was referred to me who had a major challenge. They were facing foreclosure on their properties. Over time, they had acquired properties, fixed them up, and rented them out to long term tenants. The rents that they charged were, for this day and age, through the floor - nominal figures inclusive of all the utilities. Without any formal business structure in place, they were making money and keeping under the radar, until when it happened.

The was a major collapse of some sewage infrastructure at one property. It sucked up the majority of the saved funds and then it started happening. The owners were put in a system of catch up - the funds coming in were insufficient to pay current and past commitments. Over time it resulted in a downward spiral where loss of one property would mean the loss of the others.

When we reviewed the case we found:

  • that the properties within the portfolio were quite good
  • the were under producing from the standpoint of revenue
  • no contracts were in place with the tenants 
  • tenants were tardy in their payments 
  • some were doing trade offs in terms of fixing aspects of the property and deducting it from the rent
  • the insurances were pending renewal
  • the owners needed financing fast as foreclosure on three of the properties were pending
  • one property actually began foreclosure procedures as the bank sought to recover 
  • the owners were already cashed strapped, they were doing this as a means of helping less fortunate people

Thankfully this worked out well

  • We were able to assist the client in the formation of their property management entity. 
  • All tenants were met and new leases were drawn up
  • The new leases in had with new terms and conditions guaranteed a positive cash flow for the period of years for which we sought financing for them
  • Through obtaining the financing we were able to get back the property which had begun the foreclosure procedures and actually went through the auction process. 
  • The system for operating such an entity was taught to the owners who now have the templates for not only operating their current stock of inventory, but also expanding their portfolio to include others
Why not visit our website to check us out in full. We just may be able to help you. Just in case you see anything you can tell us a bit about yourself and we'll take you through the processes  from there to ensure you have the correct resources for your needed solutions. 

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