An Introduction to Commercial Real Estate Financing Basics

Want to try your hand at investing in non-residential properties, but wondering where you can turn to get commercial real estate financing for your new business venture? While finding this type of financing isn’t always easy for the beginning investor, once you know the steps to take, getting financing for your commercial investments becomes a lot easier.

Before you get your hopes up too high, though, you should be aware that the majority of those plans to get make a million overnight by grabbing up commercial real estate for no money down are nothing but scams dreamed up by people trying to sell you something. Getting some serious financing to help you in your plans is absolutely possible, but your chances of becoming a commercial real estate investor for free are slim to none.

In this field, the next best thing to a free lunch is owner financing. This is where the seller keeps up a second mortgage so you won’t have to invest any of your own money. As you might have guessed, though, getting this type of financing is extremely rare. We’re talking unicorns and hen’s teeth, here. Even in cases where you can get a deal like this, the seller is ultimately getting a better deal and making a profit off you.

So what’s the most realistic option? If you need financing for commercial real estate purchase, your best bet is to go through a mortgage lender. The average commercial bank just won’t take the risk of lending money to commercial real estate investors, but mortgage lenders are a little more used to high risk loans. In particular, look for a lender that specifically mentions its willingness to work with unconventional borrowers or those with bad credit. This will help you find those lenders that are open to taking on a little risk.

Don’t be fooled into thinking you can easily get a loan to cover all your expenses, though. For one thing, most commercial real estate financing loans won’t cover more than 75% of the property’s appraised value. The rest of the money you’ll have to come up with yourself. You’ll also need to put a fair amount of effort into proving that the property has enough debt-repayment potential.

If you don’t think a commercial mortgage lender is for you, you can always look for a private mortgage lender. These individuals, often called angel investors, offer financing for property with a good chance of high returns despite a high risk. Unfortunately, they’re not too easy to find. First talk to a commercial mortgage lender about your chances of obtaining financing and while you’re there, ask if they can connect with any private mortgage lenders.

Obtaining commercial real estate financing isn’t so easy to get if you just jump in and expect someone to throw your dreams a “no money down” life preserver. If, however, you’re skilled at choosing investment properties with low risks, but the potential for high returns, you shouldn’t have much trouble getting financing through a mortgage lender.

There’s no reason you should be embarrassed about needing help or advice on becoming a real estate investor. Click here to get the information you need to effectively build the type of income and wealth you desire by using commercial real estate investing, more specifically through the use of triple net lease investments. If you’re ready to read more about how our real estate investment course can help you reach all of your income goals, visit our commercial real estate investment page and check out our course today. Join the thousands we have already helped and visit us now.

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