Investing in commercial real estate is an excellent way to generate income and protect your investment. Whether you’re looking for long-term investment options or a quick fix-and-flip lump sum of cash, you’ll need flexible financing options to implement your investment strategy. Learn more about applying for basic commercial property financing options today.
First, a conventional mortgage for commercial property is one of the most popular options for investing in real estate. Whether you’re purchasing an owner-occupied commercial property or a rental location, you’ll receive competitive interest rates and a reasonable loan period. A down payment is usually required for a commercial mortgage.
Some commercial mortgages are fully amortized, while others require a balloon payment. A fully amortized loan, just like your home’s mortgage, has set monthly payments for a predetermined loan period. These monthly payments add up to the full value of the loan, plus interest. A balloon payment only requires you to pay monthly payments for a short period, typically a few years, then the entire loan amount is due in one lump sum.
Most conventional mortgages require a higher credit score, larger down payment and extensive business financial statements for approval. These hurdles make them difficult to secure for small-business owners or individuals with average or poor credit.
A more flexible option for your commercial real estate is a bridge loan. Bridge loans are popular for a flexible, short-term financing solution, typically when you or your property doesn’t currently qualify for a conventional mortgage. A commercial bridge loan can often be used to finance renovations on a property that requires repairs before becoming approved for a loan. Other investors use them to bridge the gap between a balloon payment and a fully amortized loan.
If you’re struggling to become approved for even a bridge loan, there’s an even more flexible and easy-to-access loan option. Consider a hard money loan for emergency expenses or rapid financing. When you’ve been denied a commercial mortgage and bridge loan, this option allows you to build up your credit before re-applying for a long-term loan. Hard money loans require an asset to back them, typically commercial equipment or another real estate. While the interest rates can be high, you won’t have to worry about a credit check to receive these loans.
Compare these dynamic commercial real estate financing options today to find the best solution for your situation. Discuss these options with your local lender and look for the best rates as you navigate the application process.