How to Be Prepared for a Commercial Lender

If you are in the market to buy commercial real estate as an investment, you are more than likely also in the market for a commercial mortgage. Some necessary items you'll need to get approved for your investment are listed below:

1) Be sure to have your recent financial documents such as the property's income and expense records, pro form a statements, your financial statements, and a solid business plan. Remember, the lender is taking a risk when they lend you money so you need to demonstrate that their risk is low and that you and the property are a good candidate for financing.

2) Investors will need to have a down payment to invest in property. At a minimum it is at least twenty percent plus adequate reserves, closing costs, title, and lender fees. Lenders do wan to finance you but feel better when you share the risk as well as it demonstrates you have confidence in the investment.

3) It is recommended that you have a recent appraisal or formal estimation of value when you visit the bank. However, the lender may require you to get another appraisal for their records. An appraisal presents you with an unbiased estimate of the current market value and it will assist you to determine the amount of risk before any money is put out as a earnest money deposit.

4) You need to be sure that you are able to keep your current business running smoothly. If you are unable to achieve this, or not certain, then investing a large sum of money and time into a commercial property investment may not be right for you.

5) If you are a first time investor, please review any services that the small business administration has available to small business owners. The information available could mean you’re losing out on a possible below market interest loan or grant due to not checking with them in the beginning.

6) Check with several commercial mortgage lenders and apply with the one that offers you the best terms for your objectives. Keep in mind, it is a substantial investment and a loan you don't quite fully understand could put you into a costly mistake.

These tips should help you get the commercial mortgage that is required when acquiring commercial real estate for your investment goals.