| |
| |
|
Real Estate |
|
|
|
Articles and Information about Real EstateNetFinancial | Institutions | LoansColleges and Universities | Search Engines Commercial Income Property Financing: Part 1 of 3
Welcome to this first portion of a three-part series about income property. In this first segment we will be discussing financing options for commercial income properties as well as the upside (and downside) of owning this type of property. If you're interested in getting into the income property business, chances are you'll need financial assistance from your local bank or private lending institution. You'll soon discover that making sense of the many different options available can be confusing if not down right frustrating. If you're new to the income property market you may be unfamiliar with some of the terminology you'll hear. The purpose of this article is to assist the novice in getting a good start in this potentially lucrative industry. There are many different options available to you depending on the type of income property you're interested in investing in. Most lenders will recognize three separate and distinct types of property, each with it's own financing requirements. These properties include commercial, residential, and industrial income property. Commercial Income Property If you plan to invest in a commercial income property, you're probably planning to rent the building to retail businesses for use as office or warehouse space. As a commercial income property owner you can benefit from a perk not usually available to residential or industrial income property owners; you have the option to charge a percentage of your tenants monthly income in addition to a set monthly rent. This percentage is usually based on the gross monthly sales revenue of your tenant. For example, the rental contract may include a $5000 per month base rent amount plus 5% of the tenant's gross sales for the month. If you're tenant brought in $20,000 of revenue last month, you get an additional $1000 on top of the $5000 base. You may be unfamiliar with this type of arrangement, but it is actually quite common. If you purchase retail income property with good location in a growing neighborhood, this can be a good way to capitalize on your tenant's growing business without raising rent. Most income property owners charge from 5% to 10% of their tenants' gross monthly sales revenue. When it comes time to finance the purchase of your commercial income property, a private lender can usually provide better options and interest rates than your bank or credit union. A private lender is in a position to provide the best option for two main reasons; 1) unlike your local bank, private lenders specialize in income properties (as opposed to home loans), and 2) private lenders are more selective in their loan requirements allowing them to provide better terms for those borrowers they accept. Loan terms (the time the lender gives you fully repay the loan) for commercial income property typically ranges from five to twenty years. Many private lenders will also have a minimum and maximum loan amount which usually goes from $500,000 to $2 million. Interest rates can run from 5.60% to 7.20%; substantially lower than the most competitive bank. It's also important to know your lender's LTV (loan-to-value) ratio. The LTV is simply the ratio of money borrowed on a property to the property's market value. In other words, you will have to come up with a certain amount money yourself before you will be considered for a loan. Currently, most private lenders offer LTV's of 70% to 75%. If you plan on financing the purchase a $1.5 million office building with a lender offering a 75% LTV, you will need to come up with at least $375,000. In the next segment, Residential Income Property Financing: Part 2 of 3, we will be discussing how to finance and effectively manage an apartment complex. Cameron Brown is an internet marketer specializing in investment property. For more information on income property, please visit Security National Capital
MORE RESOURCES:
Real-Estate - Google News |
|
|
|
RELATED ARTICLES
Advantages and Disadvantages to Selling a House on Your Own As with any business transaction, there are pros and cons to selling your own home. Many people are intimidated by the whole process, but if you know what you are up against, and if you are aware of what needs to be done, you will be more effective at selling on your own, or you will be better at making sure your agent does what you prefer. For Sale By Owner - Use This Tip To Sell Your Home Quicker and At a Better Price Your house is for sale by owner (fsbo), Along with columns of countless other FSBO's in the Sunday paper. This one little trick will enable you to have your Ad Noticed by more potential buyers. Building Your Dream Home - Part 1 For most of my adult life I had thought about someday building my Dream Home. Several years ago I finally got the chance. Business Credit Card Dirty Tricks My system teaches people that the proper useof credit is the fastest way to speed up your profits in real estate investing.And you can use this system no matter what your own credit score is. Becoming A Battle Hardened Real Estate Veteran Without All The Scars Step 1 is always to determine the fair market value(FMV). As a real estate investor, you can always buy properties at the FMV. Odors Can Make or Break The Sale of Your Home It's amazing how important the sense of smell is to many people. If you're selling your home, and this applies across the board to houses, townhouses, condos, apartments, or whatever, you need to be aware of the power of odors. Buy or Sell First? When it comes to home buying, the ideal situation would be to find a new home, just as you receive an offer on your existing home. You would then be able to close concurrently and move into your new home a few days prior to closing on your previous home. Chapter One FSBO the Russ Miles thriller/mystery novel Chapter OneShe reached the phone on its second ring. "This is Tami!" She confidently answered. Dont Get Stuck Having To Deal With The Sellers Household Hazardous Wastes - After You Move In! I have a confession to make!I was just outside with Frankie (my dog) and noticed I stillhad an old car battery sitting by the foundation, at therear of my house.Yes, I'll admit it's not right, and quite environmentallyinsensitive for me to have it there. 3 Mistakes to Absolutely Avoid in a 1031/TIC Exchange We've all made bad decisions in the past. Don't you just hate to hear "I told you so" from your friends and family? Or, maybe you catch yourself saying "If only I'd have. Protective Covenants - Buying A Home In addition to zoning, some properties have covenants recorded at the courthouse that "run with the land." These "protective covenants" can put a serious pinch in your plans for a piece of property. Searching the Hawaii Property Listings Maui is an island so full of life and vivacity (perhapsbecause of the fact that it was formed millions of yearsago by the eruption of two volcanoes) as well as beingmixed with the enticing calm that you can only experiencewhen you are near the sea. Sounds enticing? All of thesedreams can become a reality by simply searching the HawaiiProperty Listings and making the move. 8 Essential Questions to Ask Your Home Inspector Congratulations! You've decided to purchase a home. We all know that when purchasing a home, every detail is an important one. Checklist for Buying a Home I had a client who called saying that his bath tub just fallen through the floor in his new home (new to him). Mold had eaten away the floor from the crawlspace up. Thinking About Selling Your Home? Owning a home is the original American dream. It's the old frontier spirit, wanting to claim your own tuft of the New World. Property Investing Secrets 2 Property Investing Secrets:How You Can Turn A Below Average Deal Into Streams Of IncomeWhen property investing, sometimes you'll get a seller who will say: "Sure, I'm retiring, and I need some cash flow, I need some money but if I deposit it in the bank, I'm not going to get much for it. The property market is falling, there aren't a lot of buyers and they are all beating me up on the price of my house. Selling Your Own Home - Pet Issues If you are selling you own home, you need to consider the effect of pets. People who are working with a real estate broker are sure to get coached about the potential negative effect of pets. Home Staging: How to Make Your Tract Home Stand Out in the Crowd Home sellers who wish to market their property in development neighborhoods face tough challenges. All the houses look similar. Selling Your House - $100,000 Pets Is your pet worth $100,000? It may be if you don't make accommodations for it when selling your home.A Hundred Thousand Dollar Pet?A house I'd seen with a potential buyer in an attractive neighborhood built around two lakes sold for $100,000 less than was typical for the neighborhood. Finding The Perfect Maui Home For Sale If you are thinking of relocating to Maui, this articlewill hopefully guide you to making a positive decision whenthinking of buying a home there. Hopefully, by the end youwill be one step closer to finding a Maui home for sale,and being able to purchase it.
|
|
Currency Trading | Investing | Leadership | Negoatiation | Real Estate | Stocks and Mutual Funds | Taxes home | NetFinancial | Institutions | Loans | Colleges and Universities | site map Search Engines | EZmatic | 0pops | GetSonic | TrafficFish | Health |
| © 2006 |
