Expand Your Investment Portfolio with a Commercial Real Estate Investment

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Are you in the process of considering whether to invest in commercial real estate? If so, there are a few basics that may be of interest.

First of all, it’s important to consider your loan options. Are you planning to apply for a traditional bank loan or approach a private lender? If you’re considering a private then, then there are investment mortgage lenders that provide hard money loans for real estate investors.

In general, a bank would require an applicant to meet the following conditions to qualify for a business loan:

    Have a minimum of two years in business
    Have a minimum annual revenue of $250,000
    Have a positive cash-flow
    Have good personal and business credit

If a hard money loan appeals to you, then knowing more about interest rates is on the list of commercial real estate investing basics. With private hard money loans, you can expect to pay higher interest rates. These may range from 15%-to-18% or more.

One of the benefits of working with hard money mortgage lenders, however, is that they have a faster turnaround time. In general, it may only take one-to-two-weeks to process this type of commercial real estate loan.

Do you already own a piece of property in which you have between 30%-to-50% equity? This is usually a requirement when you apply for a hard money loan. Basically, hard money loans are secured loans, and you are putting up your existing property as collateral. In this way, the commercial real estate lender’s interests and capital are both protected.

When you invest in commercial real estate with a hard money loan, it’s also important to know that these are secured short term loans. Private loans are granted for a period of up to five years, while the duration of a traditional bank loan is anywhere from one-to-twenty years.

Commercial real estate investing basics also include knowing about your actual property acquisition options. Are you considering an investment in a multi-use office building or office park? Have you considered investing in a restaurant or another commercial venture?

One of the many reasons to invest in commercial real estate pertains to the actual need for more business space. This is due, in part, to recent urban population growth. In 2011, for example, this was more substantial than suburban growth in over 100 years.

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