The Pros and Cons of Commercial Real Estate Mortgages

Business is booming.Whether you’re seeking new office space, a warehouse, or refurbishing an existing building, a commercial real estate loan may be your ideal funding vehicle.

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The Pros and Cons of Commercial Real Estate Mortgages

Business is booming. You have strong cash flows, and you’re looking to expand. Whether you’re seeking new office space, a warehouse, or refurbishing an existing building, a commercial real estate loan may be your ideal funding vehicle.

But finding the right new piece of real estate is hard enough without trying to understand the complicated commercial lending world. 

You can rely on the commercial real estate mortgage experts at Business Capital Consultants. We’ll clear up the complexities of commercial lending and find the right funding source for you — after all, your time is best spent on business operations.

We strive to ensure all of our clients are informed borrowers, so we’ve explained the pros and cons of commercial real estate mortgages below. Don’t hesitate to call us if you’re purchasing a new building or piece of land and need help finding the right commercial mortgage.

The Pros of Commercial Real Estate Mortgages

  • Allow You to Expand Your Business

The most obvious benefit — commercial real
estate mortgages make it possible for you to purchase new buildings or land so you can grow your
business.

  • Tax Breaks

The interest you pay on commercial real
estate mortgages could be tax-deductible. You can also benefit from property-specific write-offs
such as depreciation.

  • Leverage

By using a mortgage to buy property, you’re
spending less of your own money. That leaves you more money to invest in other profitable
projects. If those projects earn you a higher rate of return than your mortgage interest rate
(which is already saving you on taxes), you’ll have more cash flows.

  • Increase the Value of Your Business

As you make your commercial mortgage
payments, you’ll build equity in the property. Your business’s value will increase as a
result.

  • Variety of Payment Terms

Commercial real estate loans tend to offer
more flexibility than personal real estate loans in terms of interest rates and repayment
schedules.

The Cons of Commercial Real Estate Mortgages

  • Requirements

Commercial real estate mortgages have
substantial requirements. Lenders deem small businesses as risky; additionally, economic
fluctuations can make commercial lending riskier. 

Your finances and credit must be in top
shape to maximize your chances. If you’re worried about your ability to get a commercial
mortgage, Business Capital Consultants can help you present the best financial picture to
lenders.

  • Approval Times

Commercial real estate mortgages are
notorious for their long approval times. This is for the same reason as their requirements —
lenders want to be sure that you’re a worthy borrower.

  • Upfront Costs

Although commercial mortgages help you buy
property you otherwise couldn’t afford on your own, you’ll still have to pay a substantial down
payment.

  • Illiquidity

Real estate is not the most liquid form of
investment. If you ever need extra cash to cover your costs during lean times, selling your
property won’t be as easy as liquidating other assets.

Of course, Business Capital Consultants can
help you find another type of loan to cover short-term cash shortfalls should you fall on bad
times.

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Is a Commercial Real Estate Mortgage Right For You?

If you’re expanding your business and said expansion requires new buildings or land, then a commercial real estate mortgage is likely your best choice.

However, understanding commercial loans isn’t easy. Plus, they take a lot of time to process. That’s time that you have to spend worrying about whether or not you’ll be able to get the funding you need to expand.

Whether you’re in the real estate business or not, Business Capital Consultants can help you navigate commercial lending. Thanks to our extensive network of mortgage lenders, we can find great rates and the right term lengths for your needs. Plus, we can help you determine the right mix of credit and cash.

Schedule your free 30-minute consultation with Business Capital Consultants today.

Business Capital Consultants is here to help if you aren’t sure which short-term financing source is right for you. We’ll deal with the paperwork and phone calls for you so you can get the funding you need without wasting valuable time.

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