Category: Commercial Mortgages

You may be familiar with the structure of residential mortgages, but how do they compare to commercial mortgages

Getting started in the commercial mortgage market can be daunting if you are not familiar with the jargon. In order to be a savvy commercial real estate investor, you first need to learn the lingo. Here are seven of the most important terms used in commercial mortgage discussions: 1. Gross Income This is the total amount of money the commercial property will bring in. It include rents as well as things like late fees or laundry/vending machine revenue. 2. Effective Gross Income This factors […]

When your business needs a new facility, you face the dilemma of whether to buy your own space or lease a suitable property. While leasing offers several nice benefits like smaller upfront costs and minimal site maintenance, there are at least five very compelling reasons that buying your own facility could make more sense for your company. Buying your own property: Saves You Money Over Time Buying a property will require more money at the outset. A down payment of between 25 percent and 30 […]

When the commercial lending market climate is dry, buyers and sellers of commercial real estate start looking for creative financing solutions. One possible alternative is called a “wraparound” mortgage. While not without its risks, a wraparound mortgage can create mutually beneficial sales when no mortgage credit is available. A wraparound mortgage is when a seller provides financing to the buyer directly. The seller holds onto the original mortgage. The buyer makes a down payment to the […]

Many business owners take on commercial mortgage loans in order to buy their own work facilities and real estate. In some cases, these commercial mortgages will have a balloon payment attached to them – a lump sum payment to repay the balance of the loan after three, five or ten years. Coming up with a chunk of cash that large is virtually impossible for most businesses, but there are several options to make these loans work. Balloon payments are a way for lenders to reduce their risk and recoup […]

Commercial mortgages and residential home loans are both loans taken out on properties and they both use the property itself as collateral. What makes them different from each other? As a business owner, what do you need to know about making a commercial mortgage agreement? Borrowers While residential mortgages are usually between banks and individual buyers, a commercial mortgage is made to a company or business. An individual could sign on to a commercial loan but since the property is zoned […]

If your business is ready take the plunge and invest in its own commercial real estate, the biggest hurdle is often finding the funding. Lenders require very detailed documentation and projections for commercial mortgages. Before you hand in your application, here are a few items to check off your list: Have You Collected All Pertinent Documents? Whether or not your bank requires all of these records, it would be smart to have things like insurance quotes for the commercial property and the […]

Small businesses often need commercial real estate loans to purchase property for their company. These mortgages can also be used to refinance existing loans or to get funding to redevelop properties a firm already owns. Whatever the reason, securing the loan is an important part of achieving the goal. Here are three important mistakes to avoid when applying for a commercial loan. A Lack of CashMost commercial real estate loans require a substantial amount of money for a down payment. Yet lenders […]

Unlike the residential mortgage where personal income is critical, the commercial debt service coverage ratio is measures the income created by the property.

How can you tell when it’s a good idea for your business to take on debt? Here is a little financial food for thought…