How Do Texas Commercial Real Estate Loans Work?

2page_img1-bigIf you are looking into buying real estate for your small business, whether this is to expand your office space or to add properties to your real estate portfolio, then you are most likely seeking out a Texas Commercial Real Estate Loans. But before you begin looking for lenders, make sure that you understand exactly how these loans work.

Capitalizing on a real estate opportunity or improving your existing business space can often be a very stressful process. Not many small businesses have the capital on hand to take advantage of potential growth opportunities of this nature. This is exactly why Texas Commercial Real Estate Loans exists: to enable small businesses to make improvements or capitalize on real estate opportunities that will take them to the next level and increase their long-term profit potential.

Knowing how Texas Commercial Real Estate Loans work will help you to not only prepare yourself and your business for a potential loan, but will also help you to negotiate the best terms for you and the future of your business.

Technically, real estate loans for businesses are nothing more than a mortgage, as an individual would take out on their personal property. You are given a loan of a significant amount, agreed to be paid back over a certain period of time. This loan is secured by the value of the property that you are purchasing. If you default on your loan, the lender has the right to seize the property that the loan was used to purchase. This is a very standard practice and serves as a guarantee for the lender that the borrower will not just default, given the chance.

Also, just like a typical mortgage, the borrower is often required to front a down payment. For residential property, the percentage of payment varies and the same is true for a Texas Commercial Real Estate Loans. Typically, a small business owner can expect to have to put down approximately 25% of the value of the property for the loan.

Texas Commercial Loans also differ from a traditional mortgage in their repayment terms. A residential mortgage is often termed out over 30 years and amortized for that time period. A commercial property can have either short term or long term repayment terms. However, even a long term repayment schedule usually doesn’t go over 20 years. Again, the hope of the lender is that the infusion of capital for a small business will lead to a quick increase in profit potential so that the loan is able to be paid back even quicker.

How else are Texas Commercial Real Estate Loans different than a traditional mortgage?

One other feature of a Texas Commercial Real Estate Loans is that they are often paired with a balloon payment. This is a large payment that eliminates the remaining principal balance at the end of the term of the loan. Prior to this payment, you will have fixed payments that are of the same amount, amortized with interest. The payment schedule, however, is designed to have a certain amount left over at the end of the repayment period. That is where the balloon payment comes in. This is another structure that allows for businesses to build up momentum before having to dip into capital to make a large payment.


Dennis Dahlberg
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177 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.

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