Question regarding loans. I have a vacant commercial property in NJ that needs to be rennovated…?
Once I rennovate it will have rentable apts, and a store. What is the best type of loan to get for such an endeavor? Would a home equity loan be the right one to seek? My credit score is a little above 700. What banks are easiest to obtain loans from?
For various reasons (like taxes and accounting) your best option is to get a commercial loan secured by the property itself. When commercial appraisals are done they look at the value of the finished product rather than the present condition (as home appraisals are done). Good luck and don’t forget to shop around for the best rate.
Types of mortgages for a commercial building?
I am trying to purchase a mixed use building (5 residential units and 2-4 commercial stores) in NJ. I know that commercial mortgages are a little different from home mortgages (i.e. there are no 30 year loans).
What different types of mortgages are available for purchasing a building like this?
Also, the money borrowed to buy a home is called a mortgage, is it also the same term used for buying a commercial property?
Commercial loans have only a little similarity to commercial “business loans”. The common denominator between the 2 is usually you. They almost always use your credit, your current assets, possible using your equity in other sources (as a means of collateral). The other factor of course is the actual property you wish to purchase. If it debt services strongly enough, many options can open up to you. Commercial business loans are a lot more complex than residential and take considerably longer to complete. You would be surprised what is available to in the commercial market for a loan. Each loan scenario has it’s own conditions, and you need a professional consultant to help you find the loan that best fits your need. I know of 30 year loan options, 90% loans, leverage buy-out investments, SBA loans (7A & 504), Stated Income, etc.
I own abuilding in NJ.with 3 rental spaces,no morgage,its residential commercial how can I get a loan on it?
If all the spaces could be rented as residential, then you get a residential loan.
If it’s a mix, you might be stuck with a commercial loan.
To start, you need to calculate your income from the property and your basic expenses. The difference between the two is your net operating income. The amount left to pay a mortgage…
Commercial usually requires gross income to exceed mortgage payment by 1.5x. Residential is more flexible. The better shape the property is in, the more it will appraise for. Best residential rates will be at 70% loan to value or less.
Contact the loan department where you have your banking relationship (theoretically a stronger relationship) as a start and ask them what they can do for you.
You can also email me and I can put you in touch with a couple of knowledgeable loan consultants who are great at answering questions without requiring your first born child.
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