After purchasing a commercial property, financing options are the next major decision. The best option is a private commercial real estate loan. There are many hard lenders that you can choose from, but it is important to know how to approach them to obtain the best deals. You may not get the money you need from all lenders.
When dealing with a money lender, the principal terms of the loan he offers must be remembered. Here are three things to keep in mind. The first is the Loan-To Value (or LTV) of your loan. When dealing with private lenders, the interest rate should be considered as the second most important thing. You can easily get loans from a trusted hard money lender.
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The "Points" term is the third. Points are lump sum payments of money at regular intervals, say at the end a year. They are paid above and beyond the interest rate. You should also know that lenders may not inform you of all prepayment penalty rates. To avoid paying high penalties later, you should ask the lenders about this.
It is better to compare the rate before penalty with another private lender, and then make a decision about this. This is the most common mistake private capital investors make when looking for commercial property loans. You can avoid the hassle of having to pay high prepayment penalty rates and save yourself the pain of not being able to get a loan.