If you would like to invest in commercial real estate, financing is needed, especially if you are just starting out. Commercial property loans can be an effective way to get the financing you need to build your investment portfolio.
Commercial Property Loans
Commercial property loans are frequently used for real estate investment. By securing a commercial real estate loan, you will have the financing required to acquire a commercial (non-residential) property for your investment portfolio. Unlike other loans, these must be used to acquire commercial real estate.
Types of Commercial Real Estate Loans
There are different types of commercial real estate loans that can be used for your investments. These include:
- Traditional commercial mortgages, which typically range between five and twenty years.
- SBA 7(a) loans for commercial real estate, which is backed by the U.S. Small Business Association and is good for those who need up to $5 for investing in commercial real estate.
- CDC / SBA 504 loans for commercial real estate, which are good for those who would qualify for the SBA 7(a) loan, but need more than the $5 million limits.
- Commercial bridge loans, which offers immediate financing for short-term or time-sensitive opportunities.
- Commercial hard money loans, which are beneficial for short-term financing and go through alternative financial institutions.
Commercial Real Estate Loan Requirements
Each type of commercial real estate loan comes with its own application requirements. However, most applications look at the following:
- Credit history
- Loan-to-Value (LTV) ratio, which calculates the amount of equity a borrower has
- Business entity establishment
- Organized paperwork, including financial statements and information
You can find the financing you need for your commercial real estate investment with a commercial real estate loan. By matching the right loan with your needs, you will be able to achieve your investment goals and build the portfolio you want.
