If you’re new to commercial real estate financing, you’ll want to get a firm understanding of the differences between a residential and commercial mortgage loan. Residential real estate uses a debt-to-income formula for judging your ability to repay your loan while commercial real estate approvals place a major emphasis on the debt service ratio of the property.
The cash flow generated from your commercial real estate property will also be one of the factors in determining the current and potential value of the property. The type and amount of your commercial loan will also dependent on other factors, including your business and personal credit history, your net worth, the type and condition of property, again, its cash flow, and of course the geographical location of the property.
One of the first steps to purchasing a commercial property is to know exactly how you’ll use the property. What type of property will you acquire? How will the property be used to improve your cash flow and/or financial goals? How long will you hold the property? Will you be an owner/tenant or just an investor? These are some of the questions you’ll want to ask yourself when considering your commercial real estate purchase.
Give Consumer Trust Mortgage a call today at 610-398-9500 to get started by phone!