A commercial real estate loan is ideally given to investors who wish to purchase or build a commercial property like a business or office space. Only a few financially-stable individuals can buy commercial real estate properties without taking out a loan from a bank or other lending facility. If you are not one of them, the best alternative is to get commercial real estate financing. However, obtaining approval for your commercial real estate loan is more challenging than you think.Â
Banks and other lending institutes have very stringent guidelines to determine whether you qualify for commercial real estate financing. Many people fail to meet these requirements either by assuming or ignoring simple details required by the bank. After going through this article, you will better understand everything that can help you get quick approval for your commercial real estate loan and take the bold step of applying:
Commercial Real Estate Loans: How Do They Work?
Before looking for commercial real estate financing from mainstream lenders, we suggest you understand how commercial loans work. You can find various kinds of real estate lenders and funding. These lenders include:
- Hard money lenders
- Mortgage brokers
- Private lenders
- Conventional banks
- Portfolio lenders
Each lender has unique criteria for issuing a real estate loan. However, whenever you visit an office, chances are that the professional you speak with is a salesperson. Remember, sales professionals will not have the power to decide when issuing a loan. They will obtain all your information and give it to the underwriter. The underwriter will cross-check the data using several laws, rules, and lending regulations to determine whether you qualify for commercial real estate financing.
During the underwriter stage, the officials will assess your past trading records and determine your ability to repay the loan. Ideally, an underwriter will neither be emotionally involved nor creative when checking your loan qualification. Hence, if you wish to get the financing you need, you must persuade the salesperson to convince the underwriter that you should get the loan.
However, it would help if you first convinced the salesperson that you are worthy of the loan. Convincing the salesperson is easy; however, if you cannot provide tangible proof of your worthiness, it may get complicated to convince the underwriter, making it difficult to get the financing you need.
Finding the Right Help
When looking for commercial real estate financing, you need to find an innovative sales or mortgage broker. It would help if you have a professional who doesn’t say yes or no like a robot, but someone who can help you get your mortgage approved. A creative, experienced, and an approved mortgage broker will advise you on all the requirements to get financed.
These requirements may involve getting an appraisal, title search, building condition assessment, and an official environmental compliance certificate. When undertaking this due diligence, ensure you use a lender’s approved mortgage broker to avoid double costs. You may also ask to find the best real estate lender in your area.Â
However, even if you get the most innovative professional to help you, obtaining approval for your commercial real estate financing will depend entirely on you.
Convincing Your Lender’s Underwriter
It is essential to understand that your lender will take a significant risk to give you a commercial real estate loan, and most lenders only like to take safe bets. It will help if you demonstrate that approving your commercial real estate financing is a good deal for the lender, or else your application is bound to be rejected.
Now you might be wondering what makes a safe bet. It generally depends on your lender’s criteria and specifications. You must build a strong relationship with your lender, open an account with them, ask them about their offers, and take time to compare them with other banks and lending institutions. You can do the following to convince a lender to approve your loan:
Type of Investment
Most real estate lenders determine how much loan you will get based on the type of real estate, its age, resale potential, and general condition. If you have yet to decide on a commercial property, it can be challenging for a real estate lender to determine your loan amount.
Organize Your Finances
Banks and real estate lenders love to see a proven record of profits. They may also like to know if you are in a position to repay your loan by looking at your credit score. If you want to get commercial real estate financing, you need to have a decent credit score. However, if you have a low score, we suggest you look for a partner with the financial muscle to help you secure financing.
Explain What You Will Do with the Funds
To get a commercial real estate loan, you need to have an elaborate plan explaining how you plan to spend the money. Real estate lenders usually walk away from poorly thought-out, spur-of-the-moment proposals. Hence, it’s always ideal to have a proper plan ready.
Need More Tips? Contact Real Estate Funding Solutions For Help!
Our Real Estate Funding Solutions team can help you find the best loan terms for your next commercial real estate purchase. Moreover, our experts can give you tips to help qualify for a loan without any issues. With our help and expert guidance, you can quickly access commercial real estate financing whenever you need it. Call us at 855-913-8637 to get started!