4 Ways to Finance Debt from Commercial Real Estate Investments
In the uncertain economic climate of modern times, commercial real estate is an intelligent investment for many businessmen and businesswomen. Property retains value, especially if you can secure reliable renters. To better secure financial success, it is important to finance your debt in the best possible manner. Below are four ways you can finance your debt from commercial real estate investments.
1. Bank Loans
It’s a good thing banks are still lending money to commercial real estate investors because there is a high demand for such projects to be funded, built, and opened, particularly apartment buildings and offices. There are three factors in regards to bank loans that make them very popular right now: low interest rates, international interest in American property, and a new desire for renting a home instead of purchasing one. Banks still have the capital to help you build your real estate projects from the ground up, despite the rise of short-term interest rates.
2. Alternative Lending Methods
Besides banks, there are many other alternative lending methods you can use for commercial real estate debt financing. Nonbank lenders can offer you a significant amount of capital that is easier to secure because the lender will accept your assets as collateral, instead of simply focusing on credit scores, net profits, and other aspects on your business plan. There are many public corporations that thrive on the debt side of any business and will happily finance or refinance parts of your commercial real estate endeavors.
3. Commercial Mortgage-Backed Securities
CMBS issuances take your mortgage loans and refinance them in the form of bonds and trusts. These can only be used for commercial property loans, so they are coveted by businesspeople in the real estate market. They have gained popularity as the economy has taken several hits over the past few years, so businessmen and women want to find other ways of securing low interest rates and better terms.
4. Bridge Loans
If your commercial real estate company needs quick financial assistance or more debt financing, there is the option of securing a bridge loan. A bridge loan will give you capital for a short period of time, typically anywhere from a few weeks to a few years, while you look for a more permanent and larger amount of monetary assistance.
Whichever method you decide to use to finance your debt, make sure it is the best possible way for your financial goals.