Commercial Real Estate Loans

What Type Of Commercial Real Estate Loan Applies To The Property You’re Purchasing?

Commercial Real Estate Loans

What type of commercial real estate loan are you trying to get? There are different types of course, and so first it is important to know the guidelines surrounding the type of loan you are applying for. Every purchase of a property is an investment. Yet there are business owners buying properties, and then there are property investors. Then there are commercial loans and lines of credit that are tied to property values and equity. Here are some tips and guidelines to help you secure that commercial real estate loan.

  • Certain types of commercial property investments still fall under residential real estate in terms of loans. Did you know that? It depends on a few guidelines, one being the 1-4 family rule. Something like that is important to understand if you are buying this type of property. A person buying a property that falls into this category is an investor because he or she is wanting to rent the units out.

  • As mentioned, not all commercial real estate loans are for investment properties. Owners of businesses are still buying their own properties, too, depending on the situation. If you happen to be buying a property that falls into the category of a residential loan like the ones mentioned in the last paragraph, get ready for a discount. You see, it’s a good thing if your building qualifies for a residential loan. Those types of loans are going to be cheaper for you.

  • That’s music to the ears of any investor. It’s all about the liquidity of the investment in the bank’s eyes. Now you might be thinking that the units you have in a building are or will be rented out. Yes, of course, they will, but get this. It’s actually not about them being rented or not. It’s about how many units are a part of the property. Now if there are more than four units, well, you are indeed stuck getting a commercial loan.

  • Yet a commercial real estate loan is what you thought you were going to be applying for in the first place. In that case, carry on, unless you have been pleasantly surprised and are looking to purchase a 1-4 unit building. Now let’s say you’re still buying one of these types of properties, and the # of units is just above 4. It was mentioned to carry on, but the type of loan you’re going to be applying for is a multifamily loan.

  • Depending on the type of commercial loan you need, you’re going to want to find the best company. If the property you wanted to purchase had less than 4 units, then you would have been able to use your current mortgage company if you liked. But if you have more than the 4 units, again, what you are seeking out is a multifamily loan.

  • Then there are the other types of properties, like an office building for example. As an investor, you might be looking at a variety of different types of buildings. You will be buying them one at a time, but it can pay to educate yourself about the various types of loans tied to different buildings. Office space, industrial property and all of those types of buildings fall under commercial loans of course.

  • Are you familiar with SBA loans? That is another type of loan you might want to take a look at, especially if you’re a business owner and not just an investor. It pays to know the differences in properties, rules on occupancy and the types of loans. Even the loan options and situations that don’t apply to you will help you know more about what you’re planning to do. You want to be a knowledgeable property investor and owner.

  • Familiarize yourself with the steps tied to applying for these commercial real estate loans, too. The commercial real estate has been providing investors with nice returns in recent years. Keep in mind that the market climate could always change. Whatever loans you take out are going to be a part of your financial picture for years. You want to make smart moves, and you want the best rates.

  • Do you already own commercial properties? The best properties to buy now are the ones you can see being used well into the future. Sometimes it can be easy to find that steal and create the underdog story where you are going to try and turn an industry around. Play it smart, as you want investments that are going to make you money.

    And you want the right type of loan. Take your time networking with the best commercial loan company. Get everything squared away, and then put your plan into action. After securing the best rate, you will be confident that you’re going to be turning some profits. Then you can move on to the next investment adventure.

Must read for commercial real estate buying tips in our next article.

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