Mar 05

What Determines How Much You Will Get From Your Commercial Real Estate Financier?

What will you be looking for when you decide to start a commercial real estate business? If you are like most other real estate investors, it is certain you are looking to generate profit, and a good one at that. The best thing about the real estate industry is the fact that it has the greatest potential to generate lots of money for serious investors. Obviously the first step you will need to take is to find a good property that you should invest in. There are so many options at your disposal, and so many investment opportunities, from foreclosures to commercial real estate rentals for holidays and stuff, so clearly you will be lost for options.

commercial real estateThe second step when it comes to real estate investment is to purchase the property/land in question. If you have enough money with you, you can finance it 100%, if not it means looking for a financier who will work with you with affordable rates and terms. The financier can be a commercial lending institution or a generous friend/relative, although the latter is often discouraged. Most commercial lending institutions will definitely look for some basic requirements in order to agree to give you capital that you will need to invest in your real estate business.

The global recession that was experienced a while back affected all industries, and the real estate industry was no exception. What this means is that financiers are often quite strict in their prequalification criteria to ensure only the most potential investors get the money. Alongside your business plan, there are certain things that financiers will look at to ensure you get better terms and conditions. These include:-

Credit score

If you have ever applied for a loan, you know how important a role the credit score plays. Your credit score and your credit history in general will play a significant role in determining not only how much you get but also what the terms and conditions, as well as the rates would be. Before you start looking for a very expensive property or land to invest in, therefore, you should look at your credit score and ensure it is in good standing. If there are things you must do to correct it, by all means do them so you can get favorable terms and affordable rates.

Location of property/land to invest in

The location of the land/ property that you wish to invest in will equally play a significant role in determining whether you get financing or not. If the property is in an underdeveloped area, you may face a huge challenge convincing your financier that the area has a potential to grow. See, for a financier to give you money to finance your real estate investment, they will be banking on the fact that if you are unable to repay back the loan, they can recoup the property and sell it. They want a property located in a prime location so that selling will not be difficult and time consuming on their part.

Commercial real estate investment is a good venture, but only when all the basics add up to provide a good return on investment. Ensure you get your facts right before you hit the market in search of property and/ or financier to facilitate your investment.

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