What would our world and modern society be without buildings constructed around us? It makes you wonder what our present reality would look like without sophisticated, modern buildings that house businesses, people, and more. Well, in order for building projects to be zoned, financed, planned and eventually constructed, commercial property owners often require mortgages in order to set plans into action. Even after these buildings are constructed, property owners will then need financing in order to keep their buildings fully leased and in good condition.
Let Us Help You Finance Your Next Project
Seeing as everything in the above paragraph requires somewhat immense financing to put things into action, that’s where Abbey Mortgage & Investments comes into action. While plenty of banks, other private lenders, insurance companies, pension funds and even the U.S. Small Business Administration offer commercial real estate loans that can bring deals to life, create solid business relationships, and even help building owners avoid foreclosure.
If you’re looking into getting a Colorado commercial loan in areas such as Fort Collins, Loveland, Greeley, the Denver Metro area and beyond, Abbey Mortgage & Investments is your key to success! We’re proud to be Colorado’s go-to commercial hard money lender as we can get commercial loans closed on a much more timely basis than is otherwise usually possible. In today’s blog post, we’re going to take a look at some different options that you can utilize in order to get commercial loans, and why our hard money loans are a great way to go. Learn more about Abbey Mortgage & Investments here!
Why Do Lenders Even Make Loans In The First Place?
The primary incentive for lenders to make loans out to commercial real estate owners is that their properties typically attract wealthy tenants and sometimes even produce millions of dollars in revenue. Now, while the risk is relatively high, the actual money-making incentives can be even higher. Knowing about the various commercial loan options that are out there and how they work can help real estate professionals and commercial building owners better understand the financing options that are available to them, particularly in times of need.
A bridge loan concerns instant cash flow, where the borrower receives said cash flow in order to finance a project’s immediate needs. Keep in mind that bridge loans are temporary with a term of only one year or so. These kind of commercial loans are also normally obtained while the borrower is waiting for long-term financing to come through. Typically, bridge loans are offered by private lenders as opposed to public banking institutions, and they require excellent credit scores as well as proof of income. Beyond that, borrowers also need to show that they have enough cash to cover a property’s existing expenses as well as the new loan.
A Real Estate Purchase Loan
Real estate purchase loans are similar to fixed-rate and adjustable-rate commercial mortgages, but there’s a bit of a stipulation. In order to successfully qualify for this type of commercial loan, borrowers must have excellent credit (scores of 700 or higher), similar to qualifying for a bridge loan. In the case of a real estate purchase loan, however, the borrower must have significant savings in both their business and personal bank accounts in combination with their excellent credit rating score. Lenders typically require that the commercial property is to be used as collateral for the loan, and the loan’s rate is then determined by the loan-to-value ratio.
A Joint Venture Loan
When all parties of the loan will share a property’s profits and losses equally, a joint venture loan may be appropriate. A joint venture loan can be advantageous if neither party can obtain proper financing as separate legal entities. Additionally, private investors and investment firms usually offer joint venture loans as part of their services, and typically, two partners in a group will apply for the financing. Something to keep in mind with joint venture loans is that, unlike a true real estate partnership, the relationship between the loan applicant does not need to be official or even extend beyond the financed property itself.
A Participating Mortgage
In a participating mortgage, the lender is allowed to share part of the revenue that is generated by a commercial property. The lender will then receive its monthly mortgage payment, along with any interest, as well as a share in the property’s rental income or sales proceeds. Participating mortgages tend to be popular among office and retail properties where well-known, financially stable tenants have signed long-term leases.
Hard Money Loans
As you probably could have guessed, we want to end with the commercial mortgage loan option that we specialize in here at Abbey Mortgage & Investments. Hard money loans are an excellent and fairly rapid way to obtain the funding that you need to turn your property development ideas into a tangible reality.
In order to qualify for a hard money loan, the owner must list the commercial property as collateral, even though the loan itself may be used to save it. Hard money loans are usually offered by private lenders like our company, and we also have different standards as compared to mainstream commercial lenders. Because of these different standards, hard money loans carry a potential risk of default and a considerable interest rate. Timing is also an important factor of hard money loans, as these type of commercial loans are temporary and are usually only offered when the time is of the essence, like during a foreclosure proceeding.
Act On Your Commercial Property Development Dreams
If you live in the Front Range of Colorado or the surrounding area or you’re considering developing commercial properties in this region, Abbey Mortgage & Investments is the clear solution to get the lending you need to excel. Questions? Get in touch with us today.