If you’ve got a great idea, the least exciting part of it is probably lining up your financing. For those who are looking to invest in their first piece of commercial real estate, funding the purchase may feel like a complex and insurmountable hurdle. However, experienced investors know that this isn’t the case. There are actually many conventional and creative ways to approach financing your project. Here are some tips to help you put your plan in motion.
Evaluate Your Financing Options
If you have hard cash on hand—that’s all you need, right? Wrong! When it comes to making your first foray into commercial real estate a success, it may not be in your best interests to put your own money on the line. Instead, we recommend considering financing options that will allow you to retain a liquid capital safety net. Not only will this allow you to be personally secure, but could provide you with flexibilitby for unexpected expenses that occur along the way.
Popular financing options used by commercial property buyers include:
- Traditional loans. These are the bank and institutional lender loans that you’re probably already familiar with. To get your hands on one of these, you’ll want a credit score of at least 600 and funds to cover a down payment of 5–20% of the total purchase price.
- Private loans. Is there someone in your network who might have the funding and willingness to invest in your project? This person may be an ideal candidate to take on as a lender.
- Hard money loans. As the short term of real estate, hard money loans provide a fast solution to financing your purchase. These loans are often ideal for a buyer who is looking to renovate and sell a property quickly.
- Seller financing. In a seller financing arrangement, the seller operates as the bank and offers a payment plan to the buyer. Though private sellers may be easier to negotiate with compared to an institutional lender, they may offer higher rates for the trouble.
Contact Our Commercial Real Estate Company In Chicago
It’s best to secure your financing before making any moves on a property, as this will allow you to act quickly once you come across the perfect opportunity. Our commercial real estate company in Chicago is here to make the searching and buying experience the best it can possibly be. Contact us today to begin!