3 Amazing Tips to Help You Get the Best Commercial Real Estate Loan Possible
Investing in commercial real estate is a wonderful way to diversify your income, but buying those commercial properties isn’t always easy. You need to choose the right location, make sure the property is properly zoned, and find a way to pay for the purchase. Unless you’re paying with cash, you’ll want to take out a commercial property loan, and doing so can be more difficult than finding the right property. Here are a few tips to help you get the best loan for your needs.
1. Always Shop Around
Every lender views your application differently. One lender may see your request as risky and could offer you a low-value loan with high interest rates while another may offer you more money than you need at a below-market-average interest rate. You won’t know which lender will be the best choice unless you shop around.
Submit applications with several lenders and review their quotes in detail. Choose the loan with the highest dollar amount and the best interest rate. This will end up saving you money over the life of the loan.
2. Local Lenders Are Best
Local banks and loan companies understand the values of commercial properties in your area far better than national lenders ever will. Use this to your advantage and try to speak with local lenders first. They’ll often be more willing to give you a great loan as they understand the types of returns you’ll see from your investment.
Keep in mind that smaller lenders will be able to finance smaller loans easily but may struggle to finance larger purchases. Larger lenders may not see smaller loans as being worth their while. When choosing a lender, think about the size of the loan you’ll need. If it’s small, approach small local lenders first. If it’s large, expand your search to larger state-wide lenders or even national companies.
3. Start Applying Early
Unfortunately, most commercial lenders won’t be able to process your application quickly. In fact, it can take several months for them to reach a decision. That’s why it’s always important to start applying for loans early. Remember, you can typically get prequalified for a loan before you start looking for commercial properties in earnest.
The sooner you start applying, the easier it will be to secure financing for your building. This can make all the difference in a crowded real estate market and can help you edge out other prospective buyers that are still waiting for decisions from their lenders.
Use these tips to help you get the best commercial real estate loan every time.