Investing in Commercial Real Estate – Different financing options
The real estate market run in cycles and every few years the market suffers through a crash of the economy and then a recovery period. Investing in commercial real estate can be a complex endeavor even for the industry experts in the field to predict the right timing of when to buy and sell.
All this activity affects different financing options to the buyer, as banks are not likely to lend out when these fluctuations in the economy occur.
Some financing options available:
- Small business administration (SBA) – SBA loans are increasing in today’s economy while other traditional financing has seen some cutbacks. As part of the recovery act, government guarantees have seen a 90% increase over the last few years. These can be good investment options for owner-occupied real estate which allows the owner to put down as little as 10%. There is also fixed interest loans at competitive rates offered by conventional commercial lenders if you are looking for conventional financing.
- Retirement accounts – it is now easier to tap into retirement accounts and IRA’s for the purchase of real estate. There are legal services that give real estate investors the ability to transfer their money from their 401K and IRA accounts to a C corporation. When the funds are deposited, they can be used to purchase real estate without penalties or taxes.
- Stimulus Money– there are many different stimulus programs being offered from state and federal governments that are available to real estate investors, business owners and developers. Low income multi-family projects may also qualify for tax breaks and grants from the county they reside in.
- Friends and family– if you decide to ask a relative, friend or business associate for a loan, it may be your last and most difficult option. Be certain to create a formal loan document between borrower and lender, signed by both parties possibly with an attorney present.
There are many different financing options available to you that may require some research and it is always safest to weigh all your options before making a decision on what will work best for your investments.
To set up a consultation contact: email@example.com