How to Get Ideal Commercial Real Estate Terms

Whether you are looking to purchase commercial real estate to give your business home or for investment purposes, it is a good idea to know how to get the best loan terms. Lenders take a lot into consideration before they extend you a loan, so the more consideration you put into the application process, the better deal you can both get.

Know the Qualifications

Some of the qualifications you will need to meet for a commercial property loan include the value of the property, your net worth and your credit rating. Lenders will also look at the loan-to-value ratio, liquidity, and debt-service-coverage ratio. The more you understand those terms, the better prepared you can be to meet them.

Consider the Term and Rate

You will want to ask your commercial real estate lender whether the rate is fixed or adjustable as well as whether the term is long or short. Asking yourself which of these options you prefer before you start shopping around for lenders can help you narrow your search to the right loan for your needs. If you are looking for a commercial property to house your business, for instance, then you will probably want to have a long-term loan so have more time to pay it off.

Know What Lenders Look For

Some of the things that lenders will look for include property condition and location, the lease terms and your cashflow. Knowing this can help you make each of those items as appealing as possible to the lender. For example, a property in an urban location with a low lease turnover tells a lender that you are guaranteed some income from the property during the loan period.

Consider the Lenders

If you just go with any lender, then you may end up with less than ideal terms. This means finding a lender specializing in this type of loan with a good reputation and a history of providing quality loans to commercial property investors. You can find most of this information online through third-party review sites or ask your industry contacts.

Commercial real estate loans can be tricky to get even trickier to find with the ideal terms. When you know what to look for in rates, terms, and lenders, however, you can more easily find the right loan to fit your needs. If you also know what the lender will be looking for, then you can have an easier time securing the funding you need for the property you want.


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