Most business insiders agree that there is tremendous potential to generate income in the field of commercial real estate. However, the most important aspect of achieving success in commercial real estate is not so much a matter of finding ideal investment opportunities, as it is in securing the financing necessary to make them all happen. Here are some things you should know about commercial real estate financing.
Types of Commercial Real Estate Loans
There are at least two different loan types which are offered by the Small Business Administration, which can be used by commercial real estate investors. The first is the very popular 7(a) loan which has a maximum amount of $5 million, and the second is the 504 loan which is also backed by the SBA and which will cover amounts greater than $5 million. Traditional mortgage loans are offered by banks, and as long as you have great credit history, you may be eligible to obtain one of these. Hard money loans are available to investors at a higher interest rate, but they will generally put cash in your hands in a much shorter period of time.
Requirements for Commercial Real Estate Loans
Generally speaking, there are five factors which will be reviewed by any lender before approving your application for a commercial real estate loan. The first of these is your personal credit score, which should be at 680 or above. The next factor is your net worth, which amounts to the difference between your assets and liabilities. Thirdly, you can expect your amount of liquid cash on hand to be evaluated by a lender. You will also be evaluated in terms of your business experience in the area you want financing for. The final important factor which gets reviewed by any commercial real estate lender will be your income status on both a personal level, and as it relates to any property portfolio you might currently have.
Need Financing for Your Next CRE Transaction?
If you need funding before you can proceed with your next big commercial real estate transaction, we may be able to assist. Contact us at Infinity Lending Solutions so we can discuss some options which may be useful to you.