A Guide Through the Maze of Commercial Real Estate Loans

A Guide Through the Maze of Commercial Real Estate Loans

You’ve seen a great commercial property and want to invest in it, but the problem is getting a loan. What can you do? There are many loan products out there for this type of investor. To avoid any confusion, this article will guide you on the various types of commercial real estate loans available in the market.

Long-Term Fixed-Interest Commercial Mortgage

This type of loan works almost the same as a home mortgage. The major difference is that they have a shorter repayment schedule. Often, real estate loans won’t go past 20 years, with most falling between 5 to 10 years. Even in this type of loan, your FICO score matters. It should be more than 700 for you to qualify.

Hard Money Loans

Hard money loans usually come from private investors ready to take the risk based on the commercial property’s value instead of the borrower’s credit rating. On most occasions, hard money loans have a short repayment period of about 6 to 24 months. This type of loan is ideal for a fix and flip property because you’re hoping to have sold it within a year.

Interest-Only Payment Loans

These loans are also called balloon loans. They are suitable for businesses waiting for a significant payout in the future, instead of a steady stream of money every month. One is only required to make smaller interest payments for a particular period and then make a balloon payment at the end of the term. Most investors use this type of loan to build a commercial property, with the goal of refinancing the loan at the end of their term.

Construction Loans

You can take a construction loan to cover the costs of labor and materials used to build structures like industrial facilities, retail fronts, offices, etc. The usual term for this type of real estate loan is usually between 18 and 36 months.

No matter the kind of commercial property you want to invest in, there’s a loan for it. Talk to the financial experts at Atlas Capital Solutions if you want real estate loans. We can offer you more insight into the different loan products we offer.