Ways to Get Commercial Real Estate Financing
If you’re new to commercial real estate, you may not realize the number of financing avenues open to you for development. Not that long ago, you were limited to traditional lenders in banking institutions, but today you can more easily bypass big lenders who might not have an interest in your smaller project. By connecting with financiers across the internet or getting creative in other ways, you can take on projects of any size to bring in profits. Here are some modern options.
One of the newest and most interesting funding sources available on the internet is commercial real estate crowdfunding sites. You can place your pre-vetted plan on the web for registered investors to view. Because you’re putting it in front of a huge number of people, your funding often happens quickly and it takes place fully online.
When rehabilitating a property, getting a seller involved can be a good thing. In exchange for a lower tax burden, they can offer you money to complete the project. The nice thing for you as the developer is that the loan is often cheaper to pay back than with traditional financing.
If you have another property on which you’ve built equity, you can invest that into a new real estate deal to be paid back when you sell the new property. Just put it into your down payment in exchange for interest when you complete the sale.
You can save yourself some money by taking on a financial partner who puts down money towards the project in exchange for a piece of the profits. Take on one partner, or many, to bring in the cash you need to fix and flip the property.
Real Estate Syndications
If you don’t mind splitting profits, you can obtain a loan from a real estate syndication. These groups of investors will fund your project in exchange for a set percentage or return on their initial investment.
Various Loan Types
If you’d rather try a more traditional funding method, loans are still an option. However, they’ve become more flexible than they were in the past because you have more available choices. There are, of course, the conventional bank loans and commercial mortgages, but you could also try a hard money loan from private lenders through a mortgage broker or borrow money from people you know.
In today’s commercial real estate market, there are more financing choices than ever before. Whether you choose a conventional loan or decide to take on multiple investors, you have a better chance of getting the funding you need to bring in the best profits.