Commercial Mortgage Real Estate | Types of Commercial Real Estate for Financing
Commercial lending companies care a great deal about the type of properties that you’re financing. Lenders not only look at the qualities of the property and its estimated value, but also the types of commercial properties and the industries that are serviced.
Why Property Type Matters
In commercial mortgage real estate, the lenders are not only investing in a property – they’re investing in you and the business the property will generate. The best way to understand this is with two examples:
- Hotels/Motels – Hospitality tends to have an easy time acquiring financing because, provided they’re in a tourist heavy area, it is easy to rent out rooms and generate income.
- Churches – Churches and religious institutions have a harder time finding funding because the costs of running it are high and revenue is not a guarantee.
Lenders have to take this into consideration, even if the church is outstanding in quality and the motel is dingy. Industry and use matter a great deal to lenders, who take everything into consideration before funding a loan. Lenders will look at properties in the following categories:
- Multifamily Housing – Apartment complexes, 5+ family housing.
- Office Buildings – Properties that have multiple office buildings for rent.
- Industrial – Warehouses, distribution centers.
- Retail – Includes restaurants, clothing stores, antique stores.
- Land – Raw land, almost always undeveloped.
Other properties that are considered include healthcare properties, churches, synagogues, sports facilities, and shopping malls. All of these may be found in “other” or in retail depending on the lender.
Categories are not set in stone, but are rather used as guidelines. In some cases a lender may also specialize in a specific property type, but many lend to any industry they deem profitable. There are also lenders that will reject properties that do not fall into an area of their expertise, because loan terms are based on risk and lenders that struggle to calculate risk will usually not accept those types of loans.
CRE Lender – Connecting You to Commercial Mortgage Real Estate
At CRE Lender, our company connects you to the commercial mortgage real estate lenders and brokers that have experience working with property types of your category and closing them in as little as 2 months or less. When you’re ready to buy, sign up with CRE Lender – your source for all commercial real estate solutions.
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