Commercial Property Loans Need Careful Estimates of Likely Income to Facilitate Repayment
Commercial property is a property that can generate income from rent or give you capital gains if it is sold. Warehouses, office buildings, land that has not been developed or even an apartment building that is leased out can be considered as commercial property. Commercial loans for property allow you to acquire these assets.
The best loan is that in which you do not have to put down any deposit or can restrict this to an amount that you can quickly arrange. The traditional route to obtaining commercial loans in Australia is to go to banks. Most banks will finance up to 90 percent of the value of the property after you have convinced the loan officers that your property is commercially viable. If you have a good credit rating, you can even convince the bank or other lenders to lend you the balance amount against your available credit. Interest rates for commercial property loans are high but can be negotiated. Previous dealings and records of prompt repayment can always convince lenders to lower rates and grant acceptable terms.
You can also arrange such finance for the acquiring of a commercial property by bringing in investors or partners who can put together the required amount for the acquisition. You will need to prepare a proper presentation to convince the likely investors of the soundness of the proposition. It is also necessary that any agreements made are properly documented and made into legally enforceable contracts that are beneficial to all the parties in a contract.
Before you decide on taking out a loan for any commercial property, it is best if you do a proper research on the property to ensure that you will gain proper legal title to the property and that it has no encumbrances. You will also have to make an appropriate cash flow estimate that is feasible and practical and verifiable by the agencies to whom you apply for a loan. While deciding on rental income, you will have to make informed guesses on the occupancy factor and not be over optimistic. Real estate agents who are working in that area will be good sources of information about the potential of rental income from commercial property. Your income from the property should be able to meet the required loan repayments and also ideally leave you with a surplus. You need to factor in taxes, utility bills and maintenance requirements when you make projections.