For those who are considering buying or leasing a property to run their business, perhaps they have come across commercial real estate loans. Many of these loan programs not only help business owners to purchase a business property but also find the right locations. Well, every business owner would want to have their offices located on a safe and good neighborhood. They also want places that are convenient for their customers.
As its name suggests, you can’t use commercial real estate loan to buy personal property for yourself or your family; it’s to be used for business purposes. Some people use commercial real estate loans to purchase a storefront; others use it to purchase business offices as their company headquarters where they could have physical addresses for potential customers to visit or buy products.
However, you can use commercial real estate loans to purchase many different types of commercial properties such as shopping mall, healthcare facilities, manufacturing facilities, motels and automobile dealerships just to name a few. Any piece of property can be considered commercial property if used to generate incomes.
Few things you should keep in mind when you’re researching or looking out for commercial real estate loans; the most important one is the interest rate as this one will affect many aspects of your business. Firstly, The higher the loan rate, the higher the monthly payments you need to bear. It will take some efforts and research on your part to find the best interest rates.
Another aspect you need to consider when taking out commercial real estate loan is the prepayment percentage. You’ll need to pay a down payment at closing. This is usually set at 5-10 percentage points of the overall value of the loan; it varies between banks and loan programs. Try to find the lowest down payment percentage as it will save you some money upfront for your business needs.
Another important aspect many business owners would consider is whether to buy or lease a property to run their business. There are many factors that can influence their decisions. Some questions to contemplate include do I have enough cash outflow to buy the property? Can my business make enough money to benefit from the tax shelter? Do I need a bigger place to cater for my business growth? Is the market value of commercial properties rising or falling?
Buying commercial property to run your business is an important investment. Hence, it should be consider carefully; if you’re confident that your business needs a proper place to grow, then the commercial real estate loans might be good option for you.