| Securing commercial real estate financing can be a | | | | clearly indicate profits enough to cover expenses and |
| difficult task if you're not familiar with the field. First, | | | | loan payments is not likely to receive funds. It is |
| let's distinguish between residential and commercial. | | | | important that you investigate this before proposing |
| Residential properties are solely for housing people. | | | | a venture to a lender. Make sure you account for all |
| The location can have up to four units. Five or more | | | | of the expenses (repairs, maintenance, etc.) before |
| units, and just about anything not intended for | | | | presenting your net income on the property. |
| habitation, qualifies as commercial. | | | | Consider the laws and demographics of the area |
| With that clear, let's discuss the actual financing. | | | | because the finance agency will. If laws are going to |
| Acquiring money, and how much you are allowed to | | | | restrict the productivity of your venture, lenders may |
| borrow, is affected by a number of factors. | | | | be reluctant to provide a loan. The same is true of |
| When analyzing an investment plan, lenders consider | | | | demographics and the economic climate of the |
| the following: | | | | location. If the population is low or isn't likely to |
| * The borrower's credit rating | | | | patronize your business, again, that can effect |
| * The net income of the venture | | | | whether or not you get funding. Also, the economic |
| * The laws and demographics of the area | | | | activity of the area influences financial decisions. If |
| * The kind and number of tenants. | | | | there is a boom, your chances increase. Let's say the |
| These are not the only things lenders consider, but | | | | area is a money drain, or in an escalating slump. It will |
| these can give you an idea of how much planning and | | | | be harder to justify commercial real estate financing |
| research you need to do. We'll address these as the | | | | in those kinds of conditions. |
| most immediate concerns that you can also | | | | Also look at your tenants. For example, if you're |
| investigate on your own. | | | | proposing to open a health food store in a strip |
| Commercials all over television talk about a person's | | | | property that has several fast food tenants, then |
| credit rating. This very important number controls | | | | your business's chances of success are much lower. |
| your financing life and future. Basically, the higher the | | | | If, for instance, you open the same kind of store in a |
| rating, the more likely lenders are to give you a larger | | | | strip with a gym, yoga studio and health spa as |
| loan with a decent interest rate. For them, a good | | | | tenants, the likelihood of getting frequent customers |
| rating indicates not only your ability to pay, but your | | | | is increased. Lending institutions take these sorts of |
| level of responsibility to your debtors. If you have a | | | | things into consideration because they influence the |
| median rating, you may have to begin with a smaller | | | | profitability of your venture. |
| venture so that you can get a reasonable loan and | | | | These are not the only considerations, but they are |
| interest rate. | | | | easy to check into and can help you decide if a |
| In addition to the credit rating, but far more | | | | particular venture is worth your time and the work |
| important a consideration in commercial property, is | | | | involved in securing commercial real estate financing. |
| the net income of the venture. Financiers want to | | | | Make sure you do your homework first, and securing |
| see that the venture will allow you to pay the | | | | funds for your venture will be an easier process. |
| mortgage due each month. A proposal that does not | | | | |