Financing Your Commercial Property
harkins / August 16, 2018
Commercial property transactions commonly range in the millions of dollars. The amount of money required to finance a commercial property is far beyond the economic reach of the vast majority of Americans. The situation becomes more daunting when the various legal expenses, insurance policies, and maintenance costs related to a new property are considered. Most people do not have the option of purchasing a commercial property alone, and most commercial property is financed through some combination of personal investment, loans from banks and other financial institutions, and governmental programs that provide funding or other assistance.
Most commercial property investors will have to either work through their partners or personally qualify as borrowers. They have to be able to demonstrate some sort of cash reserves, they have to have the complete amount of the down payment ready, and their credit report has to be suitable. However, this process is not at all analogous to the home buying process, although there is a similar amount of paperwork to be filed. The investors are not looking only at the quality of the property or the price that neighboring properties have sold for. They are looking for a direct return on their investment, and that means they want to know how much profit that property can be expected to produce. Their judgment will be based as much on the projected business as the existing structure. Borrowers and financiers who keep this in mind will find their path to funding much smoother.
Governmental programs are a valuable resource. The government encourages investment in any number of ways, from programs open to people of particular occupations, to areas that they wish to develop, to businesses that they wish to influence in one way or another. Veterans of the US Military have a number of resources at their disposal to ease their path into the commercial real estate world. Careful research on this topic can be extremely rewarding.
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