Real estate can be a complex industry with frequently changing rules and regulations. This is true of both commercial and residential real estate. When it comes to obtaining a commercial mortgage, real estate agents and brokers divide commercial transactions into one of three categories. We highlight them below.
Real Estate Development
In this branch of real estate, a commercial developer purchases land with the intention of constructing an office building, retail mall, or other type of public structure. An agent working for a commercial real estate company is typically the one to handle these deals. The agent and commercial client work together to develop, manage, and lease the property. The developer applies for commercial mortgages with a bank, credit union, or finance company to spread out the costs.
General brokerage real estate agents represent sellers or buyers of commercial property. They can also help them obtain commercial mortgages. The agent is usually an independent contractor who charges fees based on commission. Some choose to specialize in specific areas of commercial real estate like office or retail and others prefer to remain more general.
People in this branch of commercial real estate manage the day-to-day operations of residential multi-unit housing complexes, commercial structures, or both. Common examples of property manager duties include processing tenant applications, arranging repairs, and hiring and managing staff. Property managers are not involved with securing commercial mortgages.
Loan Types for Commercial Mortgages
Since commercial mortgages are worth significantly more than personal mortgages, lenders have a long list of strict requirements that applicants must meet. Commercial real estate developers or brokers typically turn to their local bank or the Small Business Administration (SBA) first when trying to secure financing. A business line of credit can work in some situations where expenses fluctuate from one month to the next. Asset-based lending is also a possibility if you feel comfortable enough to put up another piece of real estate or other significant assets as collateral.
Emerald Valley Financial Services offers many options for those searching for commercial mortgages. Please contact us today to learn more or request an appointment.