The risk associated with borrowing a high percentage of the capital needed to acquire commercial real estate is that,if there is default in payment due under the loan at any time and the company is unable to negotiate more favourable terms with the lender,the ownership and possession of the property can be completely lost.

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This is because when a high percentage of the capital needed to acquire commercial real estate is borrowed, the lender typically secures the loan with a mortgage on the property. If the borrower defaults on the loan payments, the lender has the right to foreclose on the mortgage, seize the property, and sell it to recover the owed amount, leading to the loss of ownership and possession by the borrower.

The Risk Associated with Borrowing a High Percentage of the Capital