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What type of commercial loans are available?

by | Feb 7, 2023 | Commercial Real Estate

Purchasing commercial real estate takes a lot of money, usually millions of dollars. Most New York investors need financing to make their purchase possible. Consider these financing option types when seeking a commercial investment loan.

Types of common commercial loans

What type of commercial real estate loan you choose depends on the property you intend to buy. Commercial real estate buyers have a choice of four types of loans.

Conventional loans are those that are provided by banks, credit unions or other traditional financial institutions provide. These are secured by a first lien position on the financed property. Lenders will usually provide loans up to 75% of the property’s value price, with terms offers for five, seven or 10-year terms.

Bridge loans are hard money loans that are ideal short-term financing options. Private lenders typically fund these loans, which are often used as an interim financing tool for specific situations.

Commercial mortgage-backed security (CMBS) loans are fixed-rate investment products secured by commercial real estate. This loan type requires borrowers to provide a clause that guarantees personal liability against the borrower for specific acts.

Agency loans include Fannie Mae and Freddie Mac, both of which are government-sponsored lenders. These are ideal for multi-family, affordable and student housing along with healthcare facilities.

Navigating the intricacies of commercial real estate

Expanding your portfolio takes many different considerations; price is only one. Getting an appropriate loan deal can make or break the purchase. Negotiating the terms in all aspects of your commercial purchase will give you the best possible deal.

Make sure you work with the right people when purchasing commercial real estate so you can accomplish your goals. Take the time to negotiate your purchase price as well as your loan deal to ensure your financial future.