So you’re interested in obtaining real estate property. Real estate is one of those things that never goes out of style since everyone needs housing. Whether you’re looking to invest in commercial real estate or to simply buy a residential property so that you can create apartment complexes under your own companies’ name then you’re in the right spot.

We’re going to discuss what a reasonable rate is for both residential and commercial financing by diving into each of these sectors.

Prices will vary depending on the type of property but the main thing you need to keep in mind throughout this whole blog is the fact that commercial investment loans are dependent on how much potential the property has instead of how your personal finances look.

This is why obtaining a commercial property is so lucrative and quite frankly, easy to get into. Before we dive into each type of property and the rates you can expect let’s discuss the prerequisites you need to have in order to secure a loan in the first place.

How to Get Commercial Funding? (With No Experience)

You’ve done your research and have heard about the great opportunity to start a career in real estate.

I know you’re probably thinking that a rookie like you won’t have enough experience to actually secure a commercial loan. I get it, going into a new industry comes with a certain level of uncertainty but I’m here to tell you that you don’t need some extensive real estate portfolio.

The main thing you need is a credit score above 650, 20%-50% down payment on the property and basic information about yourself and the new real estate company you’re starting (start your LLC before finding a property because you’ll look more legit)

Sounds simple huh? Because it is! Most people don’t realize that commercial loans aren’t the same as mortgage loans on a personal home that you want to live in.

Instead of going super deep into your history with a good chance of being denied commercial lenders are more interested in the type of property you need investing for. As long as your lender knows you’re going to make a good return on investment they’ll be happy to secure funding for you and commercial brokers are able to source the best options.

Commercial Real Estate Types and Average Funding Expectations

Regional Lenders

This group of lenders encompasses local banks and institutions in your neighborhood. They’re fairly easy to get in contact with and receive funding from.

Commercial Mortgage-Backed Security Market

CMBS loans are based on a risk assessment to fund the loan. These types of loans look at every risk factor associated with the property you’re looking at to finance the loan. They’re both secure and safe for funding newer projects especially if you’re a rookie in the industry.

This group of lenders is large pools of mortgages. Companies on Wall Street take these properties to buffer the risk associated with the property. Beginners won’t usually be the ones obtaining this kind of loan. These loans are for the bigger guys that buy businesses and have experience in small business mergers.

*Commercial real estate can be tricky to get into if you don’t have a real estate portfolio already, getting into residential real estate can be a stepping block for the commercial (office building, industrial buildings, retail real estate) side of this industry. 

Residential Real Estate and Average Funding

Agency Debt Loans are the most frequent and popular loan types for those who are trying to finance an apartment or condo.

Government-subsidized agencies are responsible for funding this type of mortgage. They’ll even let you become creative with the way you choose to refinance. As a beginner, this is a great place to start.

Home Equity Loans are an amazing option for beginners as well because they have around 0% interest and lenient requirements to obtain an investor’s loan.  Keep in mind that investment properties are those that you keep for the long term (such as apartments) to rent out to tenants instead of fixing and flipping to create income.

Keeping your other mortgage payments up to date will allow you to get quick, reasonable funding. If your credit score and debt ratio (how much debt you have paid off) aren’t exactly where you need them to be you can either work on your credit and reapply at a later time or opt for crowdfunding.

Making a Profit and Creating a Successful Business

The honest truth is that residential real estate investors want to ensure that they will get their loan money back. Depending on the property you choose, area, and other real estate related business factors a loan servicer typically won’t have an issue giving out a loan when they can clearly see their return on investment.

As long as you come up with a foolproof business plan, set your tenant rates accordingly and properly display this information to a lender then you’ll be good to go with investing in the real estate project of your dreams.

Residential real estate is one of the easiest areas to enter into as an investor. Take these tips, implements them and contact a trusted broker to help you secure a commercial loan so that you can be on your way to real estate success.

 

To learn more about commercial and residential loan options don’t hesitate to reach out.  We’re happy to help you secure viable funding/refinancing:

(858) 324-1951

Keith McLaurin | Licensed Commercial Broker ID#01190109 / NMLS#1209195

 

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