There are a few reasons why you may be compelled to refinance a commercial property. You may have received a better refinancing offer, and taking out a new loan might reduce your current payment rates. Here are the top four reasons why commercial property owners in NYC are getting their property refinanced.
The last few years have been difficult for New Yorkers as mass lockdowns stressed them. Soon after the pandemic hit the city, more than 690,000 people fled from New York, with around 360,000 moving to another borough or upstate and the rest moving out of state. The city’s mass desertion took a toll on its real estate market. Many people in New York are still working from home, but that may change in the next year. Since most of the NYC population has been vaccinated, company executives and landlords have started preparing employees to return to the office.
This decision is generating a rise in people moving back to the city. It has positively impacted the commercial real estate market, with more rental sales and inquiries from people planning to move back to the town at the beginning of next year. If you are a landlord in New York, you can expect an increase in leases and sales in the coming months, with the leverage shooting up due to the rise in demand. However, if your current loan terms for your investment property are difficult to manage, you can always consider refinancing. When you refinance a commercial property, you take out another loan to help you pay off your existing mortgage.
Top Reasons Why NYC Landlords Should Engage In Refinancing
1. Lower Interest Rates
Not all commercial real estate loans are the same. Generally, residential real estate mortgages last up to 25 years, while all commercial loans go up to 10 years maximum. Besides the total length of repayment, commercial property loans are also imposed with different interest rates. However, most investors are stuck with adjustable interest rates determined by market conditions and several economic factors.
It means your loan repayment fees and rates are fluctuating. Therefore, when a lending institution comes up with a fantastic offer to refinance a commercial property, investors are always ready to pounce on the deal.
2. Funding Business Improvements
As we discussed, many people have now started to return to NYC. A cash-out refinance will allow commercial property owners to borrow more than what they owe on the property. After paying the remaining balance, the lender will provide you with the excess amount in cash. A commercial investor looking for funds to improve their property can use this form of refinancing. After you are done with the improvements, you can easily ask for a higher rental fee from your tenants.
3. Consolidating Debts
The pandemic forced a lot of investors to go into debt. Some investors have multiple loans, and refinancing them to consolidate them might be an excellent way to balance your debt portfolios. Lumping all your mortgages together can help you get a lower interest and repayment rate. Most lenders tend to charge borrowers with a balloon payment at the end of their loan term. A balloon payment is a one-time substantial payment for the remaining loan balance. However, many business owners can easily avoid making this heft payment by taking out another loan.
Things to Consider When Refinancing Commercial Real Estate
Timing – If your loan rates have a cut-off period or your loan’s balloon payment is coming up in a few months, it would be best to prepare your documents as soon as possible.
Additional Funds – If you need additional funds but can’t find any other source for property repairs, refinancing might be the best option.
Repayment Fees And Upfront Costs – The overall costs of refinancing a commercial property (pre-payment fees and closing costs) might burden the borrower, making the process of applying for a refinance not worth it.
Before you start applying to refinance a commercial property, the Real Estate Funding Solutions team suggests you study all your options and ensure you will benefit from refinancing. To do this efficiently, you must look at your business goals, capacities, and financial objectives. The Real Estate Funding Solutions experts can help you select the best financing option based on the abovementioned elements. You can also speak with one of our financing advisors for clarity.
Contact Real Estate Funding Solutions For Professional Insight.
New York has always been resilient in the face of adversity. The city is now showing the world its comeback like no other. If you are a commercial property owner in New York who’s hoping to refinance their retail property loan, we suggest you contact the Real Estate Funding Solutions team right away! Our experts will look at your current rate and tell you if it’s the right decision for your investment. Moreover, we can also help you find ideal terms for refinancing your commercial property loan in no time. Call our experts at 855-913-8637 for more information.