Invest in CRE
Investing in commercial real estate can be an effective way to build value for your small business. But to profit from CRE, you need to acquire it first. Our brokers work with banks, credit unions, the SBA, and private lenders to get the most competitive real estate investment deals that help you afford the property you want. Ask us about CRE financing today.
Commercial Real Estate Loans
Commercial real estate loans are how most businesses and corporations afford the upfront costs of buying property. Different from a residential loan in many ways, CRE loans mature faster and have a longer amortization period than a home mortgage. You’ll also see the average CRE loan value between 65% and 80% rather than the 100% rate often extended to home buyers. The down payment required for commercial mortgages is usually higher.
Debt Service Coverage Ratio, or DSCR, is an important figure to know when you’re in the CRE market. This number is a business’s annual net operating income divided by its annual debt payments. If it’s lower than 1, it may indicate that the business is having a hard time meeting debt obligations. Lenders typically look for a number above 1.25 to identify lower risk borrowers. Let our brokers help you calculate your business’s DSCR and find a lender that works for you.
SBA 7(a)
The SBA works with lenders to back financing for for-profit small businesses in the United States. The Small Business Administration offers several types of financing including the popular 504 and 7(a) loans. While there’s some overlap between the two, several distinctions set them apart. For instance, SBA 7(a) loans may provide working capital to the business, while the 504 loan does not. SBA 504 loans have fixed interest rates and 7(a) loans can have a fixed or variable rate. To learn more about SBA loans, speak with our professional brokers.
To be considered a “small” business by the SBA, the business’s annual revenue must be less than $5M and net worth lower than $15M. Some restrictions on the type of business and number of employees apply as well. SBA-certified lenders look at business and personal credit, so make sure your records are up-to-date. If your credit score could use some work, let us know and we’ll show you ways to boost your score fast.
If you’re not ready to invest in CRE just yet, try these alternatives:
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Construction Loans
Bridge Loans
Fix & Flip
For investors that turn over properties frequently, applying for long-term loans isn’t always the best fit. That’s why most fix and flip investors use short-term lending to keep cash flowing. Bridge and hard money loans are valuable short-term financing tools ideal for renovation and resale. The purchase price and cost of renovations can be tied into one loan to avoid the hassle of multiple lenders on the same project.
Bridge and hard money loans can be approved quickly, since most come from private lenders. A bridge loan helps fill the gap between the initial cash offer on the property and traditional financing. A hard money loan uses the value of the income property or other existing real estate in the company’s portfolio to secure the loan. These loans work well for companies without a long credit history required for a traditional commercial mortgage.
Investment Properties
Income generating properties like multi-family housing, offices, and hotels bring in continuous revenue. But they don’t start earning until you take over the property. To do that, use a CRE loan from our lender network. We have access to deals you won’t find anywhere else because we take the time to build relationships with reliable lenders. We’ll help you organize, apply, and manage your budget to satisfy the loan.
If you’re looking to rent out warehouse space, take ownership of a hotel, or invest in mixed-use real estate, our brokers will connect you with the best available financing. Once the property begins generating income, use a portion of the new revenue toward loan payments. Have questions about investing in CRE? Talk to our knowledgeable brokers and find CRE deals in your local community. Even if you’ve never invested in real estate before, we’ll help you uncover earning potential.
Lending Overview
Hotels, apartments, offices, and multi-use properties bring in revenue month after month. Start earning sooner when you use a commercial mortgage to get what you want. Even if you’re ready to buy the property outright, a loan saves you money to invest back into your business. There are also many tax advantages to borrowing over paying upfront. Ask us for more information on how to onboard new CRE today.
The Process Is Simple
Step 1:
Be realistic about your business’s financial health. If you’re struggling to meet expenses, it might not be the best time to invest in CRE. Ask us about financing options at every stage of your business’s success.
Step 2:
Review the lender’s checklist to make sure your application meets requirements. Some lenders require personal as well as business credit history. Submitting a complete application greatly improves your chances of being approved.
Step 3:
Make sure you’re satisfied with the loan terms before you accept an offer. We can help you compare lenders to discover who will give you the most value for your money.