Investing in commercial property can be extremely beneficial and allow you to make a profit. But investing in commercial properties often requires loans. When you first start out in property investments, you may not know where to begin or what type of loan you will need.
We can simplify the process of getting a loan for your commercial investment. We offer lending on single-family residential properties, multi-family properties, self-storage facilities, retail shopping center properties, hotels, and bars and restaurants. No matter what type of commercial property you are trying to invest in, we can help!
In this blog, we are going to talk about the different types of loans you can get for your commercial property. Read on to learn more and get in touch with our loan experts today!
Conventional Loan
A conventional commercial loan is similar to a loan that you would get when purchasing a single-family home. However, this loan has shorter terms. Conventional commercial loans are mortgages that are backed by commercial real estate. There are many different types of commercial properties that you can use a conventional commercial loan for.
These properties include:
- Apartments or multi-family properties
- Office buildings
- Retails centers
- Industrial properties
- Hospital and healthcare facilities
- Self-storage properties
- Hotels
- Mixed-use properties
- Churches
While typical conventional loans for single-family homes have terms that usually range from 20 to 30 years, conventional commercial loans generally have terms that are about five to 10 years. These loans may be non-recourse, limited recourse, or full recourse.
Commercial Bridge Loans
A commercial bridge loan provides a source of short-term capital. This type of loan is often used when an investor has a balloon payment coming up. These types of loans are generally used to fund the balloon payment before refinancing to a more traditional commercial loan. Once the investment property owner refinances, leases, or completes a property transaction, they will move on from a bridge loan.
Commercial bridge loans are used for a variety of reasons, including:
- To refinance an expiring term balloon loan before getting a permanent loan.
- To refinance to make repairs in the short-term, allowing the property to qualify for a commercial bank loan.
- To stabilize a multi-family property so that it will qualify for a permanent loan.
- To move a business, allowing you to put a down payment on the new property and finish paying the mortgage of the new one.
- To refinance an expiring term loan and keep your property while waiting for an SBA loan to come through.
Since these loans have short terms, they also come with higher interest rates. Commercial bridge loans are meant to provide financing for six to 12 months before repayment is due. These are not loans you will need or want for a long time, but they are a great way to cover costs before you move to a more permanent loan option.
Commercial Hard Money Loans
Hard money loans are an alternative form of capital and are secured by using commercial real estate as collateral. These loans are a source of short-term capital and are used when an investor needs to move quickly in order to purchase, refinance, or renovate their property. These loans have lower standards but quick turnaround times.
These loans are often referred to as no-doc loans, which means no documentation is needed in order to get your loan. There are many different instances in which hard money loans are a great option.
Hard money loans are appropriate when:
- You need a loan quickly.
- You need a short-term loan.
- You don’t qualify for traditional financing.
- You have poor credit.
- You need a loan without all the documentation required by a bank.
Hard money loans can be a good source of short-term capital when you need to move quickly and can’t wait months for a traditional loan. These loans are used in high-risk situations and often come with a higher interest rate.
If you are looking to invest in commercial property and need a loan, these are a few of the many loan types that you may be able to get. We offer no-doc loans, conventional loans, and alternative loans that can help you get the properties you want for your investment portfolio. Be sure to contact us to learn more and get started today!
Taylor Garske 