commercial building

Many hardworking people strive to build wealth, but living from paycheck to paycheck doesn’t really cut it in reality. Investing in real estate seems like a daunting jump for those who want to reach their financial goals, but it’s a lucrative move as it opens up opportunities for aspiring investors.

For investors looking to take the next step in their investing career and portfolio, one of the best ways to scale up and diversify finance projects is to put your money in commercial property development.

Commercial property finance is understandably more complex with higher risks that can overwhelm both new and seasoned investors, but it’s the kind of leap worth taking for your future. With that in mind, the first step is to look for the best loan to finance your commercial property investment.

Understanding the Basics of Commercial Property Finance

Commercial property finance is often granted to different businesses, funding up to a whopping 75 per cent of purchase costs for the next 30 or so years. Depending on the gross development value of the commercial real estate and the specific terms you’ve agreed on, lenders may bump it up to 70 per cent within the first 24 months of your agreement.

In other words, lenders can finance 70 per cent of the property’s value above $1 million. Commercial properties that go below a million in their acquisition can increase the funding up to 80 per cent of the purchase price, both of which have shorter finance terms between 6-18 months.

What Are the Lending Criteria for Your Commercial Property Development Finance?

When applying for commercial property finance, you first need to consider the following crucial requirements:

  • Location of property
  • Design quality
  • Analysis of use and demand
  • Pre-letting of tenants
  • Experience of borrower
  • Loan size
  • Loan duration
  • Equity provided by the borrower
  • Collateral
  • Property yield

You’ll need to submit details of your existing lease, income details, your deposit, and further information regarding the property itself to increase your chances of getting approved for commercial property finance.

Moving forward to the ideal lender for your commercial property investment involves weighing your alternatives, so you can approach a conventional bank loan, fix-and-flip loan, or tap into your home equity to secure your commercial investments.

The Bottom Line: Financing a Commercial Property Investment for Beginners

Getting the right financing solution for your commercial property investment can be tricky even as an experienced investor; that’s why it’s important to take your time to explore your commercial property financing options to ensure you get the best product that suits your needs and financial capabilities.

How Can We Help You?

Are you looking for the best mortgage brokers in Sydney? Speak to one of our agents today!

You don’t need to feel lost as you navigate the mortgage market anymore since our versatile mortgage brokers at Wealthy You can offer various affordable loan solutions for every financial need.

Contact us today at (02) 7900 3288 and check whether our fixed and variable rate packages suit your financial situation!

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