The Top 5 Commercial Real Estate Financing Methods
Properties are changing hands nationwide. Buyers are restoring and repurposing buildings to meet the needs of today’s businesses. While few commercial real estate transactions are handled with cash, there are some creative ways to meet the needs of sellers. Here are some of the most popular financing methods.
Have you considered going into business with a partner? Such arrangements have proven to be beneficial for both rookie and established investors. One of the advantages of a joint venture is the low cost of entry. For those with deeper pockets, partnerships provide opportunities to diversify.
Many investors have found sellers who were willing to offer partial or complete financing on a property. These arrangements often work out well for both parties. The seller is able to part ways with a valuable piece of real estate, turning a profit and becoming free from the operational worries of the property. At the same time, previous owners are able to generate passive income by gaining interest on the principal. Buyers who take ownership of commercial real estate are often able to generate substantial income by means of good management.
Another creative way to generate capital is to invite a number of investors to collaborate on the transaction. Those who deposit funds do so at a risk, but also stand to earn interest on top of having their original contribution returned to them. The internet has made crowdfunding easier than ever. Individuals and companies are often surprised at how quickly they are able to raise the needed funds by means of this method.
Large transactions usually come with a hefty down payment. If you’re holding onto another property that’s worth more than its previously appraised value, you may be able to tap into some of that equity and use it to cover a percentage of the principal for your next holding.
There’s no reason not to make mention of traditional loans. One of the best things about these financing tools is their widespread availability. Thousands of banks regularly compete for your business, often resulting in attractive interest rates and terms. Loans have been part of many zero to hero stories. The internet makes it convenient to review current offerings.
Whether you live in a major metropolitan area, medium-sized city or small town, there’s no denying that commercial real estate is hot. If you’ve had your eye on a shopping center or apartment building, take advantage of the myriad of available financing methods.