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How To Get Commercial Real Estate Investment Money


With the commercial property market booming across much of the western world, and emerging economies providing many investment opportunities, there has never been a better time to invest in commercial property.

The biggest single challenge facing developers with potential commercial projects is actually getting them funded.

However, with growing competition in the finance industry, relaxation of lending rules, and coffers full of money to lend, raising the funds for large scale investment projects can be simple and fast - as long as those seeking to raise the funds know how to go about it properly. The first place to start looking is the Internet. Increasingly, deals are being done online - and done fast - as long as you understand the project financing process.

Increasingly, investor pools are prepared to underwrite commercial property ventures - worth many hundreds of millions of dollars - with no credit checks, no complicated documentation, and no income verification. A commercial transaction is defined as one involving a commercial project which includes real estate as its foundation. Typically, there are two ways in which loans are made available:

The first is known as a "conforming" loan, when full documentation with limited concern for credit is required, while the second is "non-conforming" where there is no documentation required, no credit checks, and no income verification. The Loan-to-Value (LTV) aspect of all commercial transactions is one of the major considerations when providing finance. With non-conforming loans, typically up to 90% of the value of the project can be borrowed, depending on the project type. For example, non-conforming reacquisition transactions require a maximum of 50% LTV for consideration. Conforming commercial transactions offer considerable extended options. Any LTV, regardless of transaction type, purchase or refinance, is usually considered, but the following are also taken into account:

Conforming transactions approvals rely heavily on what cash an applicant has vested in a submitted project. Substitutes for cash include either collateral or a winning pro forma, but not less. Equity in real estate is not generally considered a viable substitute. Regardless of what an applicant might choose to substitute cash with, in order to justify an approval, no substitute can ever be effective without a project that makes sense.