If you’re a real estate investor looking to “up the ante”, so to speak. Then now is the time to get into commercial real estate finance. You will quickly see that the most significant difference between the two comes from the loans you need to acquire; the commercial variant, of course, tends to be more robust. Let’s take a closer look.
Real Estate Finance with Commercial Property Loans
The very basics of delineation insofar as commercial property vs. residential property is concerned, is that the latter is income-producing. As such, the available loans are structured with this attribute in mind. In most cases, you will either need to be able to guarantee the commercial property loan with collateral (or with a lien of another approved type). Another point of differentiation with this aspect of real estate finance for commercial properties is that the loan if approved is made out to your business instead of your person. Therefore, your business has to be incorporated.
Qualitatively, the real estate financing options for commercial buildings aren’t all that different from single-family residential real estate. The difference is mostly quantitative. The amount of money needed can be significantly higher. Many of the funding sources are the same, however, which means the SBA 7A Loan from the Small Business Administration is an option for those with a great credit history. Depending on the specifics of the income-producing real estate property, you may benefit more from the SBA 504 loans.
A few other real estate financing options include hard money loans at high rates of interest (these tend to be short-term), loans from the online marketplace – which includes crowdfunding, private equity firms, and the traditional bank loan route. Real estate finance is big business, and you’re certain to find help from many avenues if you can satisfy the basic requirements. Contact the experts at WCK Financial for more information on loans and finance in general.