Commercial Property Financing | StartupLoans.org

by Sean on September 18, 2011

Commercial property financing is a type of funding alternative that can be to buy a particular property for business use. This financing option is available for nearly all kinds of income-generating properties. A commercial property is essentially any kind of property that is involved in your business operations and generates income for the company. These include apartments and motels, office buildings, health care facilities, manufacturing facilities, automobile dealerships, owner-occupied buildings, shopping centers and many more.

Commercial property financing is a lot different from residential property loans since anything commercial is definitely associated with a particular business, while anything residential is associated with personal use. With residential real estate financing, lenders usually look at how much the property is worth and are usually not concerned with how much the property will sell in the future. On the other hand, the future earning potential of a commercial real estate is often scrutinized by the lender.

If you are into the apartment or warehouse business, perhaps you also would want to consider securing funds through commercial property financing to fund another apartment or warehouse project. Obviously, you first have to satisfy the requirements put forward by the lender in order to be approved for commercial property financing. The following are some of the requirements usually asked by most commercial lenders, as well as banks and other financial institutions, to finance income generating properties.

• The properties must be able to show proof of its adequacy with regards to its debt-repayment ability
• In the event that the property financed is being occupied by a single tenant, such as those usually in the commercial warehouse business, you can expect that the lender would want to check out the financial strength of the tenant
• In the case of an apartment building, lenders usually require you to provide them with an updated rent roll every year
• If the property to be financed is not residential in nature, the lender might ask for an environmental audit to determine if there is possible contamination in the site
• Usually, most lenders will only finance up to 75 percent of the property?s appraised value

Investment Value

The good news is that since there is huge investment value in commercial property, you can find a lot of lenders that service this market. Most of these lenders offer long-term and permanent fixed rate financing. Funding can also be obtained through SBA government guaranteed financing, traditional mortgages and even hard money loans. The maximum term for such funding alternative is up to 25 years, giving you enough leeway to pay off the financing during the term period. With commercial property financing, you will be able to plan efficiently the direction that your company will be taking, without worrying too much about fluctuating interest rates or short-term financial obligations.

Nevertheless, while there might be a lot of advantages that this funding alternative offers your business, it is still necessary for you to conduct an extensive research on commercial property financing. This will enable you to prepare the necessary paperwork and allow you to immediately eliminate much of the red tape, thereby making way for a smoother process, and perhaps, a quick approval of your commercial property financing application.

Source: http://www.startuploans.org/real-estate/commercial-property-financing/

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