Commercial Real Estate – Financing That High Priced Commercial Real Estate

The world of commercial real estate is an entirely different from the world of residential real estate. Commercial real estate comes with a higher price tag and a high mortgage payment. The potential for the investment may not be realized for years, especially with a new business startup. This leaves the buyer with the problem of financing the purchase. While some investors have a large sum of money saved for the purchase of the commercial real estate, others simply have a great idea and want to run with that idea. These investors need backing and partners to make that dream a reality.

The financial backing need to ensure the purchase of a piece of commercial real estate can come in the form of a business partner or co financier. A business partner holds with it, the fact that the original investor may have to give up some of the freedoms surrounding the business plan and commercial property ideas. When another business person is involved in the purchase of the real estate and it is their money being spent, they will inevitably retain some of the purchase and business power.

In order to avoid this from happening, simply have a financial contract drawn up between you and the financier. This contract will simply state that the financier will only have the business authority to make decisions, in conjunction with the investor, in regards to the property. All other decisions, be them creative or business plan related, will be made solely by the original investor. The investor must remember that the financier will have the right to refuse such a contract and may pull out of the deal when approached with the idea of signing away the ability to make decisions about their own money.

If this is not an option, the financier may need to become a business partner in order to remain on the same business page as the investor. A business partner hold one half of the decision making power. They also hold one half of the risk if the business were to fail and one half of the monetary responsibility. Being a partner means literally taking half of the business away from the investor. This half of the business will include all profits and future sales and needs to be entered into only after much thought.

Commercial real estate is a high priced, high stressed decision. When choosing to purchase real estate for a business or commercial setting, finding that little bit of extra financial help can mean giving up half of he business. If this is worth it for you to make your dream a reality, then grab a partner and jump!

If you are not in the market to give away the rights to your investment hopes, saving is the only other option. Saving money to ensure you have enough backing for the first five years of the business can mean the difference in new business success and failure after the first few years.

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