5 Tips to Get Financing for Commercial Real Estate Investing

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Are you looking to get into commercial real estate investing? There are a lot of opportunities in commercial property investing if you work at it. If you are looking to find investment mortgage lenders to help finance your plans, here are some tips to help you get what you need.

  1. You need a much bigger down payment. If you own your own home, you know that when you buy property, you have to put some of it down up front. If you want to secure financing from traditional investment mortgage lenders, you are going to have access to enough capital to make a much larger down payment than what you have to put up for a residential property. Most investment mortgage lenders require people come up with at least 20% to be able to get a traditional loan. If there is any way that you can come up with an amount closer to or more than 25%, you will put yourself in a position to get a much better deal on your loan.
  2. Run your own credit report. Before you try to get a loan from investment mortgage lenders for your commercial real estate investing plans, you need to look at your finances and credit score with as objective an eye as you can. If you can improve your credit score and become more of a good credit risk you will appeal more to real estate investment lenders. The lower your credit score, the more expensive your loan terms will be. You will pay more in interest and more in fees.
  3. Try credit unions and community banks before you try bigger financial institutions. If you find that you are not able to come up with the 20% that most mainstream investment mortgage lenders require for your loan, you may want to talk to the local credit unions and community banks for help. Their goal is often to help local people get loans for business plans that help the community. If you have an idea for a new business or to get into commercial real estate investing and can show how this will benefit the community, you have a better chance of getting some help from these financial institutions. They also have a lot more leeway and may be more able to say yes to you when you go to them looking for a loan.
  4. Will the owner of the property help with your financing? When people are turned down by investment mortgage lenders, you may want to look into to options for owner financing. It used to be that one of the commercial real estate investing basics that people selling real estate were very wary of buyers who looked out for owner financing. This is becoming more and more acceptable. Before you head down this road, you need to develop a strategy. You need to have an amount you need a loan for and to work through the terms you would accept. You need to be able to make a great pitch and have all of your i’s dotted and t’s crossed before you approach anyone about owner financing.
  5. Be creative. If you have found a really good property that you think you can really do something with and make some money on, you may need to get a little creative in how you come up with your down payment. People have looked to all sorts of alternative financing sources for their down payment arrangements. These have included credit cards, equity lines of credit, life insurance policies and more. At the end of the day, you need to research all of your other options and hunt down all other lines of inquiry, so to speak, before you opt for these very, very risky options. If you really think you are going to succeed, it may be worth it but you should do what you can to not have to get your financing that way.

Commercial real estate investing can be very lucrative. Commercial real estate is a lot different from residential real estate so you will need to do all of your homework before you take the plunge.

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