Monthly Archives: April 2017

Choose the Right Type of Commercial Real Estate

Commercial real estate loans can be one of the best options for you if you lack money for purchasing real estate properties for commercial purposes. You can use these loans for purchasing all kinds of commercial properties such as apartments, hotels, shopping centers, motels, automobile dealerships, health care facilities and many more. Commercial real estate loans can also be used for various other purposes, such as refinancing loans, establishing new businesses and even advancing or remodeling existing ones.

Commercial real estate loans can be broadly categorized into two types, namely, long term and short term loans. While long term loans are mostly availed for purchasing commercial real estate properties, and are meant to be paid over a very long time, short term loans are usually acquired for smooth running of businesses without having to face any kind of financial problems. The short term loans are also called bridge loans.

There are various providers for these loans such as banks, building societies and lending companies. There are various online lenders available, as well. One of the biggest advantages of availing online services is that they can make the entire lending process fast and easy. However, owing to the fact that there are various kinds of commercial real estate loans, it is extremely important to opt for the one that is most appropriate in your circumstances. Here are some ways you can choose the best offer:

Consult an Expert: Consulting an expert can help you immensely in finding the right kind of commercial real estate loan, especially if you do not have adequate knowledge of the various types of loans available, and their pros and cons. If you know and trust someone with appropriate knowledge about loans, you can simply follow their instructions and advice to obtain the best offer. Else, there are various loan brokers who would be more than happy to advise you and help you in finding the most suitable real estate loan.

Make a Thorough Research: You should make a thorough research on the advantages and disadvantages of the various kinds of loans available in the market. You can acquire valid loan information from various sources like the internet, financial institutions, banks and even your friends and acquaintances. Don’t hesitate to ask people who have already made commercial real estate investments about their experiences in acquiring loans. It is not always wise to depend completely on the advices provided to you by loan brokers. You should make your own research and obtain necessary information before making a choice.

Assess Your Situation: Before you choose a particular type of commercial real estate loan, you must assess your financial situation, your requirements, your long term and short term goals and the levels of risks you are ready to take. The best type of loan is always the one that suits most appropriately with your financial requirements and objectives.

Last, but not the least, you should always choose a lender with a good reputation in the market. This can save you a great deal of future regrets and harassments, and can assure you the peace of mind that you are working with someone reliable and efficient.

Benefit From Low Commercial Real Estate

Acquiring or buying a property for commercial purposes involves huge funds and hence borrowings play a key role in real estate business. Even if there is sufficient finance at hand to own a property usually one prefers to borrow as the surplus money can be used for other business purposes. Cost of a loan is what a borrower thinks all the time as it is crucial in deciding the fate of the loan seeker. And it is all the more important in commercial real estate matters. Commercial real estate rates therefore should be carefully studied before taking the loan.

Commercial real estate loan rates depend on some basic factors. First of all it should be made clear that commercial real estate loan rates are usually lower interest rate loans. The rate of interest depends on whether the loan is secured or unsecured. Any secured loan comes at lower rate of interest rate and unsecured one with bad credit history on the top of it comes at higher rates. In case of commercial real estate loan lenders keep the very commercial property the borrower intends to buy as collateral. With the loan fully secured lenders provide commercial real estate loan at lower interest rate.

Usually commercial real estate loan rates are lower in the range of 6-7 percent. This means buying any real estate is cheaper through commercial real estate loan. But lower interest rate also depends on lender to lender and credit history. In the competitive loan market each lender has own rate of interest. Compare them and further lowered interest rate can be achieved. Your credit history also determines the rate. A good credit history certainly gives more confidence to the lender and he can lower the rate of interest. Another way is to see how much you are borrowing in relation to the value of commercial property. If the borrowed amount is way lower than value of the property you can take a reduced interest rate. See if you can make a larger down payment so that borrowings remain smaller. Surely for taking commercial real estate loan at lower interest rate one needs to fulfill some high condition like good credit history.

In case you are not that highly qualified borrower, you have the option of ‘hard money’. There are lenders who are willing to accept risks in lending money to say bad credit people at high interest rate. Hard money loans for commercial real estate buying may range 12-16 percent based on risk factors.

A lot on interest rate front depends on how many commercial real estate loan providers have you studied and compared. These lenders can easily be approached on their websites. Compare individual interest rates and settle for the suitable lender. Apply online to him for fast processing and approval of the loan.

Commercial real estate loan rates are usually lower rates but a lot depends on how much eligible a borrower is. Good credit history and lesser borrowing as compared to the value of collateral certainly enable in taking a reduced interest rate.

Proactive Solution For Enhancing Your Business

Real Estate is one of the most profitable investment options. A perfect business plan is essential for applying a loan as the banks offering prepayment requires a clear idea of the infrastructure details, partnership and management strategies and regarding the property. These businesses involve an extensive amount of money and therefore financing cannot be done with your own resources. Hence, the choice of Real Estate Loans is much essential for business.

This kind of prepayment are of much financial help in business investments which allows you to buy property or an immovable asset. You can also buy commercial property for office buying, hotel or anything which have commercial and personal use on the earth. Property Loans existing in market are of four types: Refinance, HDB, Private, and Commercial real estate loans.

Refinancing a home loan is a great way to manage debt load and save a huge amount of money. Refinancing options are available for both HDB loans as well as private home loans. The refinancing criteria for these types of loans considerably differ, so make certain to check your financing specialist or lender to determine their requirements for particular situation, and if financing is desirable option for you.

Private housing loan institutes provide a variety of loan types, and are more flexible than HDB loans. There are many mortgage companies that offer private housing loan packages. These loans are appropriate for non-citizens or people whose income surpasses the maximum limits of income for HDB financing. HDB, Housing and Development Board loans have specific requirements, including citizenship and income requirements and help people to afford to buy home. Commercial real estate loans can be taken for buying properties like hotels, guesthouses, restaurants, nursing homes, etc.

Real Estate Loans can also be defined under various categories like Home equity line of credit, a form of loan in which your home serves as collateral. The mortgagee agrees to lend a greatest possible amount within an agreed term; Recreational property loan, that allows you to refinance or buy recreational property meant for personal use; Home improvement loan, that allows to borrow to renovate and ameliorate your home; Residential equity loan, a loan that can be obtained against the equity built in your present home; Residential lot loans, that are issued for refinancing or purchasing a residential lot intended for the construction of your house. Thus, by getting the excellent Real Estate Loans you can finance your dreams.

A Guide To Commercial Real Estate

Commercial real estate (CRE) is that branch of real estate that is used solely for business purposes and monetary gain. This includes retail outlets, office buildings, business parks, hotels, and residential complexes. Financing these business ventures typically comes from commercial real estate loans. These loans are secured by liens on commercial, rather than residential, property.

Differences between residential and commercial loans:

Individuals vs. entities

Just as with residential loans, banks and individual lenders are actively involved in handing out loans for commercial purposes. While residential credits are most often given to individuals, commercial advances are given to business entities such as corporations, developers, and partnerships. These entities are often formed for the specific purpose of owning commercial real estate.

Loan repayment schedules

The debt for a residential mortgage loan is repaid in regular installments over a fixed period of time. This makes it an amortized loan.

Unlike residential loans, commercial loans are paid over the course of 5 to 20 years from the day of procuring the credit. The amortization period is often longer than the term of the credit. The rates of interest the lender charges depends on the length of the loan term and the amortization period. The longer the loan repayment schedule, the higher the interest rates.

Interest rates and fees

Commercial loans are subject to higher rates of interest than residential credits. In addition, commercial real estate loans include fees that add to the overall cost of the loan. This includes fees levied on appraisals and credit application.

Prepayment on commercial real estate loans

If investors settle the debt on their commercial loan before its maturity date, they will be required to pay prepayment penalties. These penalties are of 4 types:

Prepayment penalty– This is calculated by multiplying the current outstanding balance by a specified prepayment penalty. It is the most basic of these penalties.

Interest guarantee– The lender is subject to a certain amount of interest, even if the loan is paid off early.

Lockout– The borrower is not allowed to pay off the loan before a certain specified period.

Defeasance– This acts as a substitute for collateral. Instead of giving cash to the lender in exchange for their collateral, they give new collateral.

In conclusion, residential and commercial real estate loans differ vastly from each other. When evaluating a business entities’ vie for a commercial real estate loan, lenders consider the loan’s collateral, the creditworthiness of the entity (owners), and the financial ratios.