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When is a good time to refinance Commercial Real Estate?

Posted on: January 24th, 2016 by RWS Dev Master No Comments

If you have purchased Commercial Real Estate you may be wondering when the best time to refinance is? It can be about the timing along with your financial situation before determining when to refinance and if it’s a smart move for your commercial property.

Some of the reasons to consider refinancing may be, real estate market conditions, falling interest rates and the current state of the economy. When the interest rates start dropping, it can be a good sign for many business owners that the timing is right to refinance.

There are some points to consider before taking the leap to refinance, since it may not be the right decision depending on certain situations.

Three points to consider:

  • Refinancing & cash flow – how will refinancing affect your cash flow? If refinancing reduces your monthly payment at the expense of a longer loan, that may indicate you are paying more cash over time. Determine whether refinancing will make a difference in your cash flow and it is worth the price?
  • Real estate holdings – determining your real estate holdings by making a close assessment of your property is a necessary step to decide if you will benefit from refinancing. If you own a rental property, determining the occupancy growth and averages is important before refinancing to ensure you will reap the benefits.
  • Closing costs & equity – figuring out your closing costs and how it will affect the equity in your property, including appraisals, inspections and broker fees with the possibility of rolling over some of these costs into your loan. Adding up these costs along with the expense of refinancing and divide the total by your monthly savings in loan payments. This will determine how long it takes for your savings to cancel out the extra costs. Depending on this figure and if you are looking at long term, it will probably be worth the extra costs in the long run.

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