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Are Commercial Real Estate Loans Right For You?

Many lending institutions make available commercial real estate loans which are mainly for income producing and business related sites. This loan is not something that does not require much time with little preparation and your effort, which you won't regret.

There are many projects you can go into using this loan. An example of such project is shopping centers. This requires an environment that has a better location where people coming to do business in it will want to have their office in your shopping centers.

For any business to boom the location must be seriously put into consideration. You can't get this loan and invest it in a business that will end up not yielding anything. If your building is not situated in a good atmosphere your building will just be empty because people will not appreciate it.

Having gone to the lenders for a loan it will be wise for you to utilize it well. Also bear in mind that the loan will have to be repaid. So a lot of planning needs to be done to make the business successful. Choose a business that you know everybody visits daily. That is, the business will be generating daily income. A similar organization includes gas stations, restaurants, cafe, hotels, and retail stores to name a few.

Types of commercial real estate loans

Commercial real estate loans are of two types, short term loans and the long term loans. It does not matter the kind of loan you are looking for, what matters is what you need the loan for and what you will benefit from the business you plan establishing.

To have any hope of securing funding from a bank or other conventional, institutional lender a commercial real estate deal must posses attributes such as good location (not in a particularly economically depressed area), good quality (not a-lot of deferred maintenance), low LTV, good sponsor (borrower must have a net worth at least equal to the loan amount and must have a track record of success in commercial real estate), and good cash flow. Underperforming buildings, raw land and construction deals will not be considered. The traditional lenders such as banks are worried about their own survival. Regardless of what their ads say, they will not fund your loan unless they are absolutely sure they can sell it into the secondary market if they need to.

Using commercial mortgage lender databases to find the right loan

There are a number of free commercial mortgage lender databases on the Internet to help you find mortgage lenders and commercial construction lenders who will process your application. These search directories can be very powerful tools, if you know how to use them. As a general rule, you should only use commercial mortgage lender databases that give you direct links to the lenders, not brokers. This way, you cut the paper trail and do business directly with the lender.

Most commercial mortgage lender databases require that you fill out a basic commercial loan application. After you submit your application, the database matches your data with hundreds of commercial mortgage financing programs. The results of the search will depend on your location and the type of commercial real estate loan you are looking.

Your application will be matched with commercial lenders who best meet the information you provided. You can compare rates and choose lenders who you think will work for you. If you use commercial mortgage lender databases to your advantage, you can easily secure loans for virtually any commercial property purpose. A good database gives you intelligent insight into what kind of conventional and government commercial property loan is best for your particular circumstances.

How a portfolio lender can help with financing

A portfolio lender is a unique funding source that actually lends its own money for its own account and holds the loans is makes in its own portfolio. A portfolio lender need not be concerned with the CMBS (commercial mortgage backed securities) market or with the day to day swings in the mortgage debt prices. Portfolio lenders are not constrained by any lack of liquidity in the overall credit market; they are not dependant on any markets for their liquidity.

Many portfolio lenders are private financial firms set up to make a profit by lending money against commercial real estate assets. These lenders can be organized as LLCs (limited liability companies), LPs (limited partnerships), corporations or trusts. Some are actually hedge funds or private equity firms. Other portfolio lenders are really divisions or subsidiaries of regional and community banks or smaller insurance companies.

Portfolio lenders will charge a higher rate and more points than conventional lenders do, but they tend to be more flexible and more responsive to their borrowers. For many borrowers, private, portfolio lenders have become the only game in town and, when faced with the possibility of losing a building to foreclosure or missing out on a great deal, the cost of the loan is a secondary concern.

The key to getting funded is finding the right lender for your loan. The big banks and other traditional funding sources are virtually out of the picture; they just want to make it through this. Identifying a lender that still has the capacity to lend and presenting your loan package in the most advantages manner possible, represent your last best chance of getting a loan closed.