When you need to get commercial real estate financing for an investment property or other commercial real estate property you own, you may feel overwhelmed by all the different options. It might be difficult for you to try to decide which you want to and should choose. Here is a brief look at three different types of financing that you might want to choose.
Conventional financing involves getting a loan for your property. This type of Commercial Real Estate Financing is generally considered the preferred method for getting the loan you need for your investment or commercial property. Some of the benefits include lower interest rates, and you can still have a loan out on your primary residence and multiple conventional loans on your other properties. There is one caveat to this, however. In order to buy more properties, you have to be able to show that you have the income and cash flow to support all of them at once. Conventional financing is also less expensive up front, as these types of loans usually carry lower closing costs, which means a better cash flow long-term due to the lower interest rate and more money you were able to put down when the loan first originated.
If you have reached the highest number of conventional loans you can get, you might start worrying that you are not going to reach your short- and long-term goals such as retirement, regular monthly income, etc. without financing another investment or commercial property. This is where portfolio loans might be able to help you. With this kind of commercial real estate financing, small- to mid-sized local lending institutions typically offer the financing. These loans involve having a five year fixed rate loan, which then adjusts based on whatever the interest rates are at the end of the introductory period. These loan fees can be less expensive or similar to the fees associated with conventional financing, making these more affordable than many people realize.
Lines Of Credit
Finally, one other option for commercial real estate financing that you might want to look into is lines of credit. There are actually still banks out there—often local ones—who will grant lines of credit to those investors and commercial real estate professionals with whom they have good relationships. If this sounds like you, a line of credit for an investment or commercial property can be a great way to gain some flexibility in your spending. Whatever type of financing you choose, talking to a professional who is very familiar with commercial and investment lending is a great idea.