6 Ways to Finance Commercial Real Estate Investments

Investing in residential or commercial real estate can be a worthwhile business move. While there are some risks, it can also pay off and generate a lot of income over time. If you are interested in purchasing an investment property but you don’t have the necessary funds, there are several financing options available. Here are some of the ways you can acquire the money you need.

1. Fix-and-Flip Loans

If you don’t want to keep the property for your own use, then a fix-and-flip loan might be for you. This is a short-term loan that will provide you with the cash you need to fix up the property and resell it quickly for an immediate profit. They’re easier to obtain than other loans but come with high-interest rates.

2. Private Money Loans

Private money lenders do not loan money professionally but instead are people you know, like friends or family members, with a bit of extra cash that they may want to invest in your business. This type of loan generally has less strict terms and requirements.

3. Hard Money Loans

Unlike private loans, this is a professional loan and will, therefore, require more qualifications and will likely come with stricter terms and higher interest rates. These are usually short-term loans which makes them less suitable for income properties that will take longer to generate a profit.

4. Home Equity Loans

This type of loan allows you to use the value of your home to finance another property. If your house has a high value, you will be able to receive more money. However, because lenders can repossess the investment property if you aren’t able to pay, this can be a risky choice.

5. Commercial Investment Property Loans

If you are exclusively interested in buying commercial real estate, then this is the best loan for you. Because of the nature of this loan, you are more likely to be approved if you have a good credit score and a business plan that tells the lender how you will make money from the property. 

6. Mortgage Loans

A common option for investing in real estate is a conventional mortgage. To qualify for a mortgage, you will generally need a good credit history and credit score. You will also need to pay a portion of the property’s value as a down payment. 

The type of loan that you should apply for depends on whether you are planning to purchase residential or commercial real estate as well as your plans for the property. Make sure to consider all of your options to determine what is best for you.


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