Knowing what your company’s goals are in investing in commercial real estate is one thing. Getting the financing and turning them into a reality is another.
Financing your next real estate investment is far simpler when you have the help of proven professionals. is investing in commercial real estate the right next step for your company? Choosing to work with an experienced lending professional with experience in real estate is the safest bet for success.
How much is enough? Tips for determining right amount for your Texas Commercial Loans
Your company may be ready to take out a commercial loan, but are you sure that you’re borrowing the right amount? This quick discussion about loan size will help you make an informed decision.
The process of financing a real estate project with a Texas Commercial Loans can be quite complex. One complicated question that borrowers will have to figure out is the exact amount of capital that will be needed to bring the project to fruition. The most obvious answer to this question is the exact amount of the project cost or the market value of the property your company is interested in acquiring. However, borrowers rarely take out this amount in full.
Your company’s strategy for its assets, access to capital and the direction of the real estate market will determine the appropriate loan amount for the project. Note that total loan amount of can vary greatly, even between similar projects in comparable locations. Thankfully, sufficient research can help your company determine the optimal loan terms.
What are you expecting to put down upfront? – Instead of thinking about how much loan debt your company is willing to put on, it helps to start thinking about how much capital the company is willing to invest from the start. The size of your down payment will have a significant influence on the terms a lender is willing to extend.
For example, if you offer up a down payment that covers a significant amount of the cost, the lender will be more willing to extend friendlier interest rates. A large down payment will also significantly offset the total amount of money you pay to the lender. As a result, the amount your company needs to borrow is lessened.
Are your real estate goals short- or long-term? Depending on how risk averse your company’s leadership tends to be, the size of your loan will be largely based on the short- or long-term strategy for real estate assets. If you company feels very confident about its ability to flip the project in just a few months, taking a loan equal to 80-90% of the value of the property seems like less of a risky approach.
Conversely, if the company plans to spend a long period of time using and renovating the asset, a larger down payment will be necessary. With flexible loan terms that come with a lower loan-to-value or loan-to-cost ratio, companies can strategically build equity while paying off their loan.
Do you have funds to cover additional costs? Under the impression that a Texas Commercial Loans can only be used to cover the cost of building a project or purchase property outright. This is not the case. Texas Commercial Mortgage funds are commonly used to fund improvements to the facility, as well as other strategic upgrades. Between these costs and extra fees associated with commercial loans, there are plenty of extra costs associated with the loan that could be absorbed by your new source of capital immediately.
The Right Texas Commercial Loans Unlocks Untold Potential For Your Business
Remember that a private lender with experience in the commercial real estate industry
can provide you with extra insights into the amount you plan to borrow.
The more detailed your business strategy, the more a lender can provide you with advice specific to your needs.
A detailed business plan, including input from an experienced lending professional, should provide you and with all the facts you need to borrow the right amount for your real estate project.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.