Investing in commercial real estate takes a keen eye to spot properties that will increase in value either with time or after renovations. Commercial real estate investments also require capital, and navigating the landscape to secure adequate funding can be challenging. But whether you are investing in your first property or if you are seeking larger financing for a unique project, commercial real estate loans all have some commonalities.
Security and Collateral
All commercial real estate loans require collateral in one form or another. Lenders do not like to assume most of the risk involved in a transaction, so they require property investors to provide equity against the funds being borrowed. In the case of commercial real estate loans, equity could be an existing property in your portfolio, assets, such as vehicles or equipment, or even the property directly involved in the deal at hand. The security and collateral will help determine the total amount of the loan.
Credit History
Commercial real estate loans can be very accessible, depending on the lender and the credit requirements. Traditional lending channels still consider the commercial real estate arena to be full of risks, so credit requirements are usually higher when borrowing from a bank. Alternative lenders and financial firms that specialize in commercial real estate loans understand that credit is not the alpha and omega of the approval process. Regardless, it is always wise to clean up your credit report and improve your score as much as possible proper to seeking a loan.
Income Sources
Commercial real estate loans need to be repaid, and lenders like to see proof of income before they approve applications. For traditional loans from banks or credit unions, lenders will want to see proof of employment and that you draw a steady paycheck. However, for career property investors who generate income from rent or property sales, there aren’t regular paychecks. In those cases, property investors might want to use stated income loans, which have minimal paperwork and use a combination of tax returns and simple bank statements as proof of income.
Exploring Commercial Real Estate Loans
Golden Century Lending provides a wide range of commercial real estate loans, ranging from SBA and conventional loans for commercial properties, to fix and flip, stated income, construction, and more. Contact our offices today to get the financing you need.