When people plan to get involved in the California real estate market, they may be planning to finance their investments in a variety of ways. Some people might be investing cash, while others may use FHA loans or home equity loans to get started buying commercial real estate. There are also special commercial real estate mortgages that are especially designed for investors. Unlike a traditional residential mortgage, these types of loans close quickly and qualifications are based on rental income and investment history. Typically, they offer shorter lending terms and some are designed specifically for short-term financing processes.
Hard money loans are one type of a commercial real estate financing vehicle. They are backed by the value of the property being purchased, and lenders will be interested in its value after repairs and potential on the market. In addition, medium-term and bridge loans are designed for periods of several months to several years and are meant to finance short investments. These loans are not issued by traditional mortgage lenders like those used to finance a home purchase. An investor’s application is evaluated on the basis of the investment itself and their history in real estate more than on their credit score.
The short terms of these loans can make them especially appealing for those who want to get into the business of flipping commercial properties. At the same time, they tend to have higher interest rates, higher down payment requirements and tougher qualifications for a loan. Experienced real estate investors are more likely to be approved for these loans.
People considering investing in commercial real estate may be able to explore a range of financing solutions to support a profitable venture. A real estate attorney may provide advice and guidance on negotiating the purchase of commercial property, including securing necessary financing.