5 Great Ways to Obtain Commercial Real Estate Financing
When you are looking to get into commercial real estate, you will need to start by deciding what kind of funding you are going to use. The right funding can help you secure the projects that you want to build, improve or manage when you want to purchase them. You have many different options for getting this funding including loans, seller financing and crowdfunding. Finding the right financing option for your needs can be easier than you think, and the first step is to understand what each type is and what steps you need to take to get it.
Commercial real estate can be purchased with traditional business or property loans from banks. This form of financing will take into account your credit, or that of your business, as well as the value and potential value of the property before approving the financing. This is considered the most traditional way to get financing for real estate, private or commercial, and can have the biggest impact on your credit.
Crowdfunding is one of the most quickly growing income source for many different types of businesses, and real estate developments are not an exception. This financing source raises capital from a large pool of investors in exchange for products, services or business shares. Commercial crowdfunding companies set up to aid in real estate developments will offer pre-vetted projects to their investors to quickly raise the needed capital.
Joint Venture Financing
Commercial real estate can, traditionally, be funded by joint venture financing in which you bring on a financial partner who then gets a percentage of the profits. This differs from crowdfunding in that you will need to find the partner and bring them in on your own as well as in the fact that it usually means a smaller pool of investors.
This financing method means converting equity in one project to a down-payment on another project. You can trade the equity of properties you own or bring in investors who can trade their equity to your project.
Sometimes you can get the seller to invest on the property through financing it with you. This keeps the seller involved in the project and can lower your tax burden.
Getting financing for your commercial real estate projects can be easier than you may think. Not only are there many different financing options, but those options cover a wide array of possibilities. This means that you can find the right financing for almost any project and situation.