The Best Financing Option For Commercial Real Estate Investors
When it comes to finding financing for commercial real estate projects, it is considerably different than getting financing for a traditional home. Most lenders are more risk-averse and will go the extra mile to make sure their investments are sound. Commercial real estate lending can often come with higher interest rates, which can lead to individuals questioning if the deal is the right one for them. The following are just some of the ways to find financing for your next commercial real estate deal.
Private money lenders do not typically represent traditional lending institutions but instead, work as a private party. Private lenders participate in asset-based lending models, which allows them to focus more on the property than on the borrower. When applying for private money, there are fewer chances of being denied. Promising properties with potential will most likely guarantee you a loan. It’s important to remember that private money lending does come with a significant price, but they allow fast transactions.
Local and regional banks, as well as credit unions, are synonymous with funding smaller deals. These types of lenders typically offer short term financing with an option for balloon payments or rate resets. While their size allows lenders to be more flexible and more creative when signing loans.
National banks can offer investors a wider range of financing options making it possible to finance a commercial property with long-term fixed-rate mortgage options. National banks will often conform to the same bank business model that smaller institutions use to land a deal. If you are considering working with a bank to fund a deal, it is important to do your research and find the right banking institution with the right financing options.
Life Insurance Companies
Life insurance companies are a great source for commercial real estate financing. Investors can finance large, sought after properties with the capital they receive from life insurance companies. It’s also important to note that life insurance companies can often be a little more conservative with their lending but are known for longer-term deals.
Before looking for funding for your commercial real estate deal, it is important to conduct your research to see what deal might be best for your project.