Free Rent as Capital Investment? (lender, fees, debt, sue)

[backfist]

Hopefully I don't seem too naive in asking this question. For the sake of a business plan for a commercial lender, would it be appropriate to list free rent as an initial investment in the business?

The free rent was in exchange for increased rent in year number two.

Thanks in advance.

[chet everett]

Let's think this through.
If you are trying to get financing to buy a property, and you tell the lender you are giving tenants "free rent" how are they going to view your cash flow?

From the other side:

If you are a business start-up and you want financing to get going and tell the lender that you found a landlord that is going to throw free rent you way for a year but then try and get you for double market in following year to make up is that going to give them any confidence?

I think you need to have a realistic assessment of the kind of costs and /or income you are likely to see. If the lender sees that these numbers are supported by the data from similar situations they will be more likely to lend to you. If, after you get the funding, you decide to exercise some creativity and it works out well the lender won't care. If you decide to deviate from the plan you laid out and it works out poorly it won't really matter, especially if things were to work out poorly and you were sticking with the plan that followed current rents. Either way if things REALLY go south the lender will seize any collateral / sue for unsecured debt...

Lenders don't want to hear "free" in anything other than their own ads, where the know the 'fine print' means that they will make up any costs in fees from the unsuspecting!

[backfist]

Thank you.