Owning commercial real estate often comes with many hurdles, all of which may require a particular kind of financing to overcome. There are various commercial real estate loans to help cover any situation you might be in, whether you need funding for maintenance, expansions, or anything in between. Being informed as to your options will help you secure the right kind of financing and keep your business on track. First, ask yourself what category of manager you are.
For the Average Manager
Some loans are best suited for those who are potentially looking to upgrade or expand and need a loan to do so. A participating mortgage, for example, is popular among those who lease properties long-term for their business operations, such as office and retail spaces. Along with your normal monthly payments towards your mortgage, you will pay your lender a negotiated percentage of your revenue. If you have a lot of liquidity and excellent credit, you may be eligible for a purchase loan. Your property is used as collateral to secure this type of loan, and interest rates are assessed on an individual basis.
For the Desperate Manager
At some point, you may find yourself in a position where you need funding quickly in order to cover a major expense. In the worst-case scenario, you may even need to avoid foreclosure. Luckily, there are two types of short-term loans to help those who need cash fast: bridge loans and hard money loans. Bridge loans are typically only used as a stand-in for a traditional loan, but because bridge loans are processed more quickly, it’s an easy way to hold you over until you can secure a larger sum. All you need is good credit and a positive cash flow. If foreclosure is a serious threat, hard money loans can save your property. They are higher risk loans, which means you’ll be subject to much higher interest rates, but they can be the difference between owning and losing your property.
For the Management Team
Sometimes people go into the commercial real estate business with a partner in order to divide income and the burden of expenses appropriately. If you have a partner and are looking into commercial real estate loans, a joint venture loan might be the viable option. Because both partners will be signing the loan, both of you will be responsible for payments on the loan even if your partnership is eventually dissolved.