Commercial real estate entails dealing with warehouses, office buildings, retail stores, and other business buildings. The value of a property is computed by estimating the income it is likely to bring to the owner. The income value has been used in the industry for a long time. Capitalization rate is a figure that is use to represent the actual value of a property and the income it is expected to produce. The Atlanta commercial real estate finance enables business owners to buy properties such as building or open land for development purpose.
The industry is populated with many banks as well as independent lenders who are willing to finance the investors. The investors (business entities) can acquire funds from alternative sources of capital such as pension funds, insurance companies, and other private investors. The terms and conditions for securing and repaying the financial help resemble those of residential loans. Therefore, financial stability and excellent track of record in repaying is a mandatory requirement.
The financial assistance can be either conventional or government supported. Businesses that do not qualify for conventional ones are forced to opt for the government-backed loans since they are easy to acquire and less strict. Before opting for any particular source of finance, it is important to compare options that are provided by several commercial lenders. In case the business is new in the industry, the owner will have to use his or her credit worthiness history.
The terms and conditions associated with commercial financial assistance are stricter than residential loans. The duration may last five years or less to about twenty years. Their loan terms are shorter than amortization period. Most lenders capitalize on longer amortization and loan term duration to acquire satisfying returns. Nevertheless, the terms are negotiable.
Commercial finance attracts higher interests than residential ones. They entail fees that are added to the total loan cost such as legal, loan application, loan survey, appraisal, and loan origination fees. Some of the costs are required to be settled upfront before loan approval while others are designed to apply on a yearly basis.
To eliminate instances of investors paying the loan before the recommended time, restrictions are put in place. The restrictions preserve the interest of the lender. In case an early repayment is opted for, repayment penalties will apply.
Mostly business entities purchases properties, leases them out to other business, and collects rent. The properties are leased out in order to generate income. Therefore, a lender must consider the amount of income collected, credit worthiness, financial statements of three to five years, and financial ratios.
Tom G. Honeycutt is a full-time real estate entrepreneur in Atlanta, GA. Tom helps readers by providing practical and useful knowledge to better understand lending choices. If you are looking for Best Atlanta Commercial Loans Lenders he recommends you check out www.ifundinternational.com.