Commercial Property Loans, all you need to know!
Are you thinking of moving your business to a new location or property? Are you ready to finally buy a property for your enterprise? Then it’s time to start understanding the nature of commercial property loans. Let’s begin.
What is a Commercial Real Estate Loan?
First, let’s define commercial real estate. In simplest terms, it is real estate used only for business purposes. This is your retail store, office space, or your boutique. Any place where you conduct business is a commercial real estate.
As a business owner, you have the option to take a commercial property loan to finance your business property or any construction you may need. Also, only businesses can take commercial property loans. Individuals aren’t allowed to get a commercial property loan.
How Do Commercial Real Estate Loans Work?
Commercial real estate loans exist to help enterprises or businesses purchase income-producing properties or refinance debt on properties they already own. Individuals alone can’t apply for a commercial real estate loan. Commercial real estate loans are reserved for incorporated business entities (e.g., corporations, developers, funds, and trusts).
Commercial real estate loans can help finance the property acquisition, construction, and development. Examples include shopping malls, retail stores, office buildings, and hotels. Although they work like traditional mortgage loans, there are key differences that set both loans apart. As a business owner, you should be able to understand this.
Commercial real estate loans are known as one of the best investments as they offer numerous advantages over residential investments.
Aside from they generate monthly cash flow, they can also be a business’s dominant source of income. In the next sections, you’ll learn more about the different types of commercial loans, who are eligible to take the loan, and how to get one.
Types Of Commercial Real Estate
To fully grasp the idea behind investing in commercial real estate, one must first learn the different kinds of commercial real estate. Most commercial spaces are leased and paid for monthly. Here are some of them:
- Office - Retail - Industrial - Multifamily - Special-Purpose
Features of Commercial Property Loans
- Purchase an existing commercial property or lease a new clinic, office, or retail space.
- Under the commercial property loan, you can also get financing for improvement or construction of an office or retail space.
- Mose lenders also provide expert legal and technical counselling so you can be sure of the property you’re buying.
- When you take out a commercial real estate loan, you should expect your lender to have a lien on your property. It would be best if you are well prepared to make a down payment.
- Commercial loans are typically medium or long term: some lasting three years or less, and some lasting five-twenty years.
A commercial property loan can be availed by businesses or self-employed individuals who are running their own businesses. Examples of self-employed professionals include doctors, engineers, lawyers, consultants, and architects.
Commercial real estate loans are loans that are used for purchasing, constructing, or renovating a commercial property.
Getting a commercial real estate loan requires knowing the type of commercial loan you need. This usually depends on your business and property, as well as your lender options.
The overall commercial lending process might have similarities with residential property lending, but there are also key differences you need to watch out for. Furthermore, applying for a commercial mortgage can require a lot of time.
Investing in commercial real estate involves a lot of planning and financial know-how. Commercial lending policies are also complex for an average buyer. So, if you want to get the best deal, it is important to have an expert on your side.
This is where commercial loan brokers come in. The reality is that we need them as much as they need us. A broker can help in the following ways:
1. Contacting a Lender
Professional mortgage brokers will have multiple lender relationships. Some of them may even access to hundreds of lenders, so you have a choice when you partner with a broker. Plus, a mortgage broker who is an expert on commercial property loans can help you in the making of your application. They might also be in contact with key lenders that can help you in specific situations. Because of their expertise, you’ll never regret your decision on your loan options.
2. Reduces the Risk in Working With A Single Lender
Working with a broker allows you to submit your application to different lenders increases your chances of getting funded. You’ll not be trapped in a few options, and you can have more bargaining power with an expert on your side. Given that commercial loans are more tricky than residential loans, it’s best to get advice first from a mortgage broker. A specialist broker will reduce the risk when negotiating. This is extremely helpful when applying for big loans.
3. Identify The Best Price
A good broker will help you identify the best lender for your business. He’ll know the cost differences which may seem complex at first to you. This saves you a hefty amount of money and time. Commercial property loans are pretty challenging so having a legal and financial broker to help you understand your options is a true lifesaver. They can save you from costly problems later on. Always consult your mortgage broker before making any decisions.
Getting the right commercial property loan can result in better capital returns and rental years. It’s always wise to consult with a broker first before applying for any commercial loan.
V Corp specializes in helping entrepreneurs, and self-employed individuals get the best commercial property loans. If you’re planning to refinance your commercial property or buy a new one, we can help. Contact us at V Corp