Commercial Real Estate Loans: Finding Solutions without Interest Hikes
In the first quarter of 2018 the Fed announced the very real possibility of interest rate hikes on bank loans. As we near the end of the third quarter, we have seen three increases in interest on traditional loans, with more coming down the line. Property investors are wary of taking out traditional commercial real estate loans because the current high interest rates combined with more hikes make funding projects cost-prohibitive. Fortunately, there are ways to get commercial real estate loans and make existing debt more manageable without throwing yourselves to arbitrary rate increases.
Consolidating Existing Real Estate Loans
People who have been in the commercial real estate business are frequently juggling two or more loans. Even if your revenue is high, trying to keep track of liabilities with different payments and interest rates can cause big headaches. To make things easier, use debt consolidation. By consolidating liabilities into a single loan with fixed low interest rates, commercial real estate investors will make accounting easier, and protect themselves against sudden interest rate hikes.
Real Estate Loans for Flipping Houses
With a growing housing market, house flippers are generating revenue hand over fist. Instead of using bank loans, commercial real estate investors are using loans specifically designed for fix and flip projects. Depending on the size of the project, house flippers are supplementing capital with bridge loans to cover immediate expenses and prevent delays.
Larger Commercial Real Estate Transactions
For larger projects and transactions, property investors use equity and mezzanine financing. Some projects are too large for conventional loans. When purchasing and renovating an office building, hospital, or multifamily rental, having an equity partner will ensure capital is available at every step of the project. Mezzanine and equity loans for commercial real estate can be arranged quickly and tailored to the requirements of the project at hand.
Stated Income Loans
In addition to interest rate hikes, banks have placed high requirements on commercial real estate loans. Traditional lenders view commercial real estate as a high-risk investment. In order to sidestep the red tape and denials, commercial real estate investors use stated income loans. Instead of requiring proof of salary, stated income loans are based on revenue present in bank statements combined with documentation and tax returns. Stated income loans are much more accessible than traditional loans, and can be arranged quickly so commercial real estate investors don’t miss out on any time-sensitive opportunities.
Wise Commercial Capital specializes in commercial real estate loans with competitive terms and low fixed interest rates. Contact our offices today and avoid getting caught up in rising interest rates on commercial real estate loans.