Buying Commercial Real Estate Is A Whole New Ballgame - Commercial Lenders Are Different
Posted by Goody on 03/17/08 in Business
We all know that the residential real estate business has all but dried up. You may be wondering how you can make some money in real estate with the state of this market. You may have heard that people that were into residential real estate are now diving head first into the Commercial Real Estate Market but it’s a whole different ballgame.
First of all let’s start with what makes a property a commercial property. Of course we all know that office buildings, retail space and warehouse space are commercial but a multi-family unit is also considered commercial if it is 5 or more units.
With a residential mortgage you go out and get pre-approved and start shopping and when you find a new property you’re approved as long as it appraises for what you are offering the seller and you have the income that you stated. With commercial mortgage lending the lenders look at the property more than they look at you. They want to know that the commercial property that you want to buy is producing income. They don’t look as much at your income as they look at the income of the property.
That being said you won’t know if you’re approved for a new commercial mortgage until you give the commercial mortgage broker the income information on the individual property that you are thinking of buying. They will need a completed application along with the rent roll which will show them how much the current owner is receiving in rent on each unit. They will also want to see leases and operating expenses which include real estate taxes, insurance, common utilities and repairs. They will also want to know if you will be occupying any part of the commercial space and if so how much and what type of other businesses now occupy the other commercial space.
Of course your credit score is going to be important too. Obviously the higher your credit score is the better for you. If you have credit issues I offer credit repair on my websites. Credit repair is money well spent because you can usually get the money that you spend on it back the first month or two of a new mortgage. Just click on the links below for information.
Also, the interest rate that you will receive on the new commercial mortgage will be decided by a few things. Namely your credit score, how much money you are putting down and the type of property that it is. Commercial Lenders charge a higher interest rate for bars/restaurants and a lot of commercial lenders will not lend on gas stations. We do have lenders that will lend on gas stations but the interest rates are going to be higher.
There’s a lot to learn before you take the big plunge into commercial real estate and you should do your homework first.
Sandra Sheely is President of First Financial Mortgage, Inc. in Sunrise, FL. She has been in the Real Estate Industry for 12 years with experience in the mortgage industry and title industry. She has a couple of Mortgage websites. http://www.ffinancialmortgage.com and http://www.lowestraterefi.com
Tags: buy commercial property, commercial, Commercial Mortgage, commercial real estate, commercial refinance
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