The year 2015 proved to be a success for the investors in the real estate industry. Most of them accrued immense profits and they are looking forward for the same to happen in the year 2016. The challenge that most business entities that invest in the industry face is the complex process of acquiring alternative capital to fund their projects. Mostly, investment banks and independent lenders provide Atlanta commercial real estate finance. However, the business entities must prove the ability to repay by providing documents that confirms their financial stability. Commercial properties are valued according to the revenue generated from them either monthly or annually.
Real estate investors turn to banks and independent lenders for loans. Other sources of capital include insurance companies, private investors, and pension funds. The requirements for securing the loans are similar to those of private loans. Therefore, the business must possess an exemplary track of record in payment of loans sourced from reliable lenders in the industry. In addition, a proof of income must exist and the businesses adhere to the set loan-to- value rates.
Investors are offered diverse financial options by financial institutions in case their credit worthiness is confirmed. They receive the loans through the conventional plan. Those that do not have enough evidence to support their credit worthiness are forced to turn to the government for financial help. With the different options available for selection, conducting a thorough research is a wise decision. New business entities need to present financial information of their owners.
The loans are accompanied with stricter term than residential type. The minimum duration is five years while the maximum is twenty years, although some plans can last less than five years. The amortization period takes much time than the terms. When both the amortization and terms are longer the lenders enjoys satisfying interest rates. On the brighter side, business companies can negotiate and acquire financial help with shorter amortization period.
The interest rates associated with these loans are significantly higher. The overall loan cost includes fees like loan applications, appraisal, loan origination, and survey fees. In addition, some fees must be settled up prior to loan approval. Other charges are added to the debt annually.
The financial assistance has restriction on period of paying. These restrictions are put in place to ensure the interests of the lender are protected. For example, if the investors decide to pay the debt prior to maturity of the loans, prepayment penalties will apply.
Mostly business entities purchases properties, leases them out to other business, and collects rent. The properties are leased out in order to generate income. Therefore, a lender must consider the amount of income collected, credit worthiness, financial statements of three to five years, and financial ratios.
Real estate investors turn to banks and independent lenders for loans. Other sources of capital include insurance companies, private investors, and pension funds. The requirements for securing the loans are similar to those of private loans. Therefore, the business must possess an exemplary track of record in payment of loans sourced from reliable lenders in the industry. In addition, a proof of income must exist and the businesses adhere to the set loan-to- value rates.
Investors are offered diverse financial options by financial institutions in case their credit worthiness is confirmed. They receive the loans through the conventional plan. Those that do not have enough evidence to support their credit worthiness are forced to turn to the government for financial help. With the different options available for selection, conducting a thorough research is a wise decision. New business entities need to present financial information of their owners.
The loans are accompanied with stricter term than residential type. The minimum duration is five years while the maximum is twenty years, although some plans can last less than five years. The amortization period takes much time than the terms. When both the amortization and terms are longer the lenders enjoys satisfying interest rates. On the brighter side, business companies can negotiate and acquire financial help with shorter amortization period.
The interest rates associated with these loans are significantly higher. The overall loan cost includes fees like loan applications, appraisal, loan origination, and survey fees. In addition, some fees must be settled up prior to loan approval. Other charges are added to the debt annually.
The financial assistance has restriction on period of paying. These restrictions are put in place to ensure the interests of the lender are protected. For example, if the investors decide to pay the debt prior to maturity of the loans, prepayment penalties will apply.
Mostly business entities purchases properties, leases them out to other business, and collects rent. The properties are leased out in order to generate income. Therefore, a lender must consider the amount of income collected, credit worthiness, financial statements of three to five years, and financial ratios.
About the Author:
Tom G. Honeycutt is a full-time real estate entrepreneur in Atlanta, GA. Tom helps readers by providing practical and useful knowledge to better understand lending choices. If you are looking for Best Atlanta Commercial Lender he recommends you check out www.ifundinternational.com.
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