Over the past 20 years, Americans with a keen eye for generating revenue have consistently gravitated to investment properties. From fix and flip projects to rental units, and even new construction – individuals have been investing in commercial real estate to generate revenue while building equity value. Before investing in commercial real estate, there are a few tips and tricks to make the process easier.
1. Look at your credit score
Hardly anyone pays for property in full, so additional financing is typically required. Since many full-time commercial real estate investors work independently, their credit scores are the big factor that determines whether or not they are approved for financing. While some commercial real estate financing programs will accept scores as low as 660, credit ratings above 700 are ideal.
2. Prepare for a sizable down payment
Most conventional forms of financing will require down payments ranging from 15% to 20%. The size of the down payment will partially be determined by credit ratings and financials, depending on the type of loan.
3. Pay in cash whenever possible
It is possible to secure financing ahead of a transaction, and use those funds to make an offer on a property. However, cash has the loudest voice in the commercial real estate arena, and sellers are more likely to accept cash offers over offers that are still being processed by lenders.
4. Avoid bidding wars
Bidding wars on the “perfect property” only benefit the seller. Check your pride at the door and know that there will be other opportunities. It makes no sense to blow your entire budget just on the purchase price, especially if there are still renovations to be made.
5. Get to know your local wholesalers
Wholesalers keep entire lists of properties that are available, and often have leads that other property investors don’t know about. It is wise to make inroads with wholesalers to jump on early sales and to get good pricing.
6. Get financing tailored to your transactions
Golden Century Lending offers a wide range of fast and efficient commercial real estate financing programs to property investors at all levels. Contact our offices to get your next transaction funded.