Valuable commercial real estate opportunities in desirable areas are hot commodities, so having your financing lined up before you invest can be the key to getting the best deal. By following these few tips from real estate and financial professionals, you can remain ahead of the game when it comes to your ability to finance your commercial real estate venture. Whether you are a new business or looking to expand to a new space, finding the perfect piece of real estate can affect your business success.
1. Explore Current Banking Relationships
If you already have an established relationship with a specific bank, whether business-related or personally, check first to see if they have a conventional business real estate loan program that offers a good deal. If you are a new business it can be difficult to provide a track record of success, so a personal relationship can help establish your credibility.
2. Find Out if the Seller Will Finance
Sometimes the seller of commercial real estate property is a real estate investor who offers direct financing. If that’s the case, it’s possible to score a deal with lower interest and flexible terms. Some sellers offer rent-to-own options if you aren’t quite ready to buy.
3. Consider an Unconventional Loan
Businesses without a history of proven success can have difficulty finding financing, so some owners choose to use the business itself as collateral in a non-traditional loan situation. There are pros and cons to this type of loan, so make sure you know what you are agreeing to when securing financing this way.
4. Don’t Count Out a Third Party
If you are starting out and need a large amount of capital to get up and running, an investor could be a way to fund the upfront costs. Once your business is turning a profit, you can pay back the third party investor and then cut ties for full ownership.
5. Put Up the Cash
If you can swing it, pay for the commercial real estate property upfront in cash will usually score you the best deal. Cash buyers can negotiate on price and sometimes get some added perks thrown in for an added bonus. If you have the cash funds, you can also put in bids for foreclosure or auction properties at a fraction of the conventional real estate market cost.
Part of a business owner involves finding the perfect real estate property to get started. Securing financing isn’t always easy, but following these five real estate funding tips can save you time and money.
