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Fund a commercial propertyCommercial property funding can require large capital. Banks and financial institutions will easily lend you 80 percent of the value of residential property. Some readily go above 90 percent, and depending on economic circumstances. Such high loan-value ratios, however, are extremely uncommon with commercial properties. Typically, banks will lend 50 percent of the appraised value of a commercial property. Some will go to 60 percent, and more rarely you can talk banks into 75 percent. Commercial properties are generally valued on the basis of their rental income. Appraised value when tenanted may be two or three times the value when empty. Banks and financial institutions will take longer time to evaluate your deal. So be wise to put more working days for finance condition on your contract. The interest rate on commercial property morgage is normally higher than residential morgage. However if a 1% difference in interest rate makes the difference between profit and loss in a deal, don't bother! Also most banks and finance institutions want the loan paid off, or substantially so, by the end of the current lease. Therefore be prepared to get short-term money from second tier lenders for your commercial property. Bear this in mind: Select a bank or financial institution that understands property and, more importantly, understands you.
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