What’s lacking is the financial resources to make it happen. Whether you’re looking for an industrial building mortgage or a mortgage to renovate an apartment complex or retail site, there are factors any lender is likely to consider. Along with your credit score, the following are usually at the top of the list. The Property’s Location When it comes to financing the purchase of a commercial property, location makes a huge difference. The lender will want to know if there’s a reasonable chance that the property will at least retain the current market value for the duration of the loan.
Why does this matter? In the event you default on the loan, the lender wants to be relatively sure that the property can be sold for enough to settle the loan, plus any collection or legal expenses. As long as you can provide verifiable information that the property will at least hold on to the current value, the odds of being approved for a loan are higher.
The Condition of the Property
The property does not have to be in pristine condition, but it does have to be in good enough shape to be used within a reasonable amount of time. For example, you’re looking to buy an older apartment building. The lender will likely want confirmation that the structure, including the foundation, is sound. It’s up to you to confirm that the property is worth the cost of purchase and renovation. Unless you can convince the lender, obtaining the loan will be difficult at best.
Your Cash Flow Situation
You can bet that the lender wants to know you have enough income to cover the amount of the installment payments. This is especially important if it will be some time before the property can begin to generate revenue. Different lenders will consider a number of income sources; the key is that they should be consistent sources that you can depend on from month to month.
Experience With Similar Projects
If you’ve already successfully renovated a property and have a history of retiring loans associated with that project on time, more lenders will be willing to take a chance on you. Even if those projects were done under the auspices of a past employer, the experience that you bring to the table will stand you in good stead. Don’t be afraid to point out any past experience that equips you to make this pending project a success.
The Amount You Want to Borrow
It’s hard to find a lender who will finance every penny of the project. A more likely scenario is that a lender will be willing to finance 80% or less of the total needed. Assuming that figure is below the current market value, you should find it easier to obtain the financing that you need.
Remember that you do want to keep some cash in reserve for unforeseen expenses. At the same time, allocate as much as you can to the project. Along with boosting the chances of finding financing, you also have less to repay over time.
Are you ready to find financing for your project? Someone like Steven Tulman, mortgage broker in Toronto is a good place to begin. Call today and arrange to have a discussion. Bring along your documentation and other essentials. It could be that the financing you need will be easier to obtain than you expect.
