If you are ready to invest in Commercial Real Estate, you need to look into the best way to finance your investment. On the debt side, there are typically only two options available, a Conventional Mortgage or a Hard Money Loan. Below you will find information on the process of these options.
Applying for a conventional mortgage can be a slow and arduous process requiring much documentation. At the other extreme, you might be able to secure a hard-money loan in days without producing copious financial information, especially with a strong asset because they are lending on the property equity and not the borrower’s credentials.
In general, banks and lenders will require you to meet these commercial real estate loan qualifications:
- Up to five years of tax returns.
- Your books, records and financial reports for up to the last five years or since inception, whichever is shorter. Will include off-balance-sheet financing, such as leases.
- Projected cash flows for the life of the loan.
- The credit reports of the business and all owners/partners.
- Your state certification as a corporation or limited liability entity.
- A third-party appraisal of the property.
- A business plan that explains how the property will be used, as well as an explanation of the company’s management expertise and commitment.
- For some programs, proof of citizenship.
Hard Money Loan
In general, Hard Money Lenders will require you to meet these loan qualifications:
- Down Payment / Equity. The main requirement for obtaining a hard money loan is having the necessary down payment or equity in the property to serve as collateral for the loan.
- Cashflow of the property (can it service the debt?)
- Exit Strategy
- Experience in Real Estate.
H&O Capital Funding has helped countless real estate buyers, sellers, lessees and lessors achieve their goals. Our legacy is unwavering commitment to the communities we serve. Houlihan & O’Malley Commercial Real Estate Services specializes in four distinct, yet overlapping, areas of business: Commercial Brokerage services, Private Mortgage services, Appraisal Services and Advisory services.
For more information on loans that we offer, visit our website.