Tips when shopping for a commercial loan
The February issue of Entrepreneur Magazine has tips on shopping for a commercial real estate loan. While focused on the business owner looking to finance his or her business, the ideas work just as well for anyone looking for cash to invest in a property.
- The article says to resist the urge to go to your existing bank off the bat. Review various loan terms from several lenders. Often you can get a better package from a lender with knowledge of your industry or the type of property you're looking to finance.
- Watch out for recall provisions in the loan which allow the lender to ask for immediate payment. An unwise investor might have to scramble to refinance at the wrong time.
- Although they charge a commission, it's sometimes useful to hire a commercial mortgage broker to help you find the best fit for your circumstances. They can often save time and money in the long run.
- Be sure to hire a real estate attorney to review the loan documents and terms.
- And finally, don't make your decision based on price alone - although important look at the whole picture and how your plans fit with the lender's.
