Beware of these Common Mistakes About Commercial Real Estate

When it comes to commercial real estate, most people have to rely on a variety of different financing options. This is particularly true when you are still in the start-up phase. If you need money for equipment, expansion or projects, then you need to make sure you get the right type of financing.

However, if you’re about to seek out funding, you need to be wary of these common mistakes.

Not Doing Research

The first mistake that many investors make is that they don’t thoroughly research their options. You want to make sure that you do your due diligence so that you know the commercial loan terms and how they are different from other banks and commercial lenders.

Selecting the Wrong Lawyer

It’s important to have a skilled real estate attorney on your side to negotiate the terms and to make sure you get the best deal.

Not Having the Cash

Even if you apply for a loan, you still need to have some cash on hand. Commercial lenders want you to invest some of your own money into the project.

Not Reviewing Balance Sheet

Review your balance sheet ahead of time. You need to analyze your liabilities and cash flow before you make a decision. The last thing that you need is to be stuck paying off the loan without having enough money to take care of your business.

Failing to Negotiate

Make sure that you negotiate for a better deal! Many investors do not realize that they can negotiate the terms of their deal.

Not Having a Plan

Whenever you seek out a loan, you should have a strong business plan to back you. Lenders are wary of financing investors that do not have a business plan.

Going to a Familiar Lender

Some investors go straight to a familiar lender. Be careful about this. You do want to go to someone you trust, but you should also make sure that you know what other commercial real estate lenders have to offer.

Not Checking Out the SBA

The SBA has many different loans that you may be able to use to your advantage. Don’t count them out before you check it out.

Lacking Documentation

There is a lot of documentation that you need to have together before you seek out a real estate loan. The more that you have together, the easier the process is going to be.

When it comes to commercial real estate financing, it doesn’t have to be a daunting process. As long as you follow what not to do and have all of your finances in order, it can be a painless process.


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