Several Ways to Finance Commercial Real Estate
Imagine being able to create a funding source from which you could easily and quickly draw upon funds to finance any commercial real estate investment in any market. There are simple steps to take to achieve this goal.
A commercial property investor can borrow money from an individual IRA to complete an investment and pay the IRA back an amount of interest that is agreed upon in advance.
Lending institutions, insurance companies and venture capitalists have been using similar concepts to raise money for years. Commercial real estate investors can do the same thing by utilizing a self-directed IRA. Apply this concept to your commercial property investments, and you become more profitable while you stay ahead of the competition.
3 steps to finance Dothan AL Commercial real estate
This commercial real estate example illustrate how this works and it also applies equally to other commercial property investments involving notes, tax liens, and private placements.
- 1. Remember, the availability of money is what is important here, not the cost of money. Find an investment property and negotiate a 75% or less loan-to-value ratio- give your investors safety for their investment. Most lenders will not even talk to you without substantial skin in the game in the financial market of today. (see our next article series) Build in an attractive rate of return to pay your investors out of the gross profit and leave yourself enough time, by writing a contingency clause in your letter of intent, then find your investors.
- 2. Present the deal to potential commercial property investors, look for business professionals of high net worth. These are often professionals that can withstand investment risk and are looking for above market passive income. It is important that you offer an attractive, preferred rate of return and structure the offer so they hold the first lien on the property. Present your private offering to qualified accredited and/or sophisticated investors. Explain the security they have in the transaction to them in your commercial property proforma. Remind your potential investors that their returns are tax-deferred depending on which type of IRA they have.
- 3. Complete steps one and two and educate your investors on the investment advantages of using their self-directed IRA to invest in commercial real estate. Alright, maybe that was only 2, but you get the idea. Continue to educate youself and your investors and keep everyone in the loop for maximum trust and return.
For more information on this and other ways to possibly finance your next Dothan commercial property, contact one of our agents today. We have agents specifically experienced in whatever area or industry you need. For more information on finance and on pre-approvals, check out my affiliates article at Abilene Texas real estate and Enterprise AL real estate on building inspections.
Coldwell Banker Commercial Alfred Saliba -
Your Dothan Al real estate expert!
|
