If you are planning on purchasing or developing commercial real estate, whether the properties are meant for offices, warehouses, housing, retail spaces, etc., commercial property loans can be a major part of your success. These loans are a strategic tool for income-generating properties, but proper planning and knowledge are vital when you’re considering commercial property loans.
Here’s what you should know before applying for commercial property loans:
- What is a commercial property loan? A commercial property loan is a type of funding used to buy, build, or refinance real estate that is meant for business use (office spaces, retail stores, warehouses, apartments, etc.).
- Loan types vary. Commercial property loans aren’t the same for every type of property or situation. The type of loan you get depends on your goals, timeline, and business plan. Different loans come with different terms, rates, and requirements.
- Credit status matters. Lenders for commercial property loans will take a look at your personal and professional financial history, statements, and tax returns. This determines rates and terms you’ll be presented with.
- Property type has an impact on approval of the loan. Lenders also consider what type of property you’re purchasing or developing because that can carry more or less risk.
- Down payments are higher with commercial property loans. With income-generating commercial properties, you should expect a higher down payment as compared to residential mortgages, so keep in mind that you’ll need to have capital available.
Types of Commercial Property Loans:
• Traditional Bank Loans
• SBA 504 and SBA 7(a) Loans
• Bridge Loans
• Hard Money Loans
Lastly, you really should have a solid business plan established, so you know what you need, and so lenders have the information they need. We’d be happy to assist you in your search for commercial property loans, so you can get the best guidance for your investment needs.