Financing a commercial real estate property can prove a challenge when you have few options to raise the money. It is hard to finance a commercial property to completion individually. You need to find a sustainable and effective source of funding that will help you meet your goals. This is where looking for a commercial mortgage-backed security loan (CMBS) becomes instrumental.
How CMBS Loans Works
CMBS loans are loans that you can secure if you want to invest in commercial real estate properties such as offices, hotels, warehouses, apartments, and retail buildings. It aims at providing financial support to commercial real estate investors. You can easily get CMBS loans from commercial and investment banks and conduit lenders.
Unlike other forms of loans you will secure from financial institutions, these loans are long-term, and you can have an amortization period of up to 30 years. You should, however, prepare a balloon payment to settle the amount at the end of the loan term. You should expect up to $2 million to finance your commercial real estate project.
It is beneficial that these loans come with fixed rates that range between 4-5% but depending on the market trends, there can be fluctuations. You should also note that the borrower has no liability over your property. This means you get to enjoy full profits from your investment as long as you keep your end of the bargain with the borrower. You can, however, face legal actions when you purposely damage the property.
Benefits of CMBS Loans
With these loans, there is direction on where you can invest the money. Chances of misuse of funding are lower as you invest objectively. You work closely with the borrower making it easier to stay on course and meet your goals.
You have a longer gross period to repay the loan and also enjoy lower interest rates. As an investor, you have time to concentrate and work toward making your commercial profitable instead of worrying about repayment needs. The best way to funding your commercial real estate project is by securing CMBS loans. This is because it helps you handle your financial needs properly. Get in touch with Emerald Valley Financial Services for more guidance about commercial real estate funding.