Are you thinking about dipping your toes into the Denver commercial real estate game, eager to start receiving the massive potential benefits associated with this smart investment asset? If so, you’re going to need to start considering your options for getting a commercial loan, as you likely won’t have all of the necessary capital up front needed to seal the deal. If you’re serious about considering the the steps you need to take prior to becoming the proud owner of any commercial real estate in Denver, here are some things to be aware of.
In traditional residential loans, credit score is a big factor in determining what you will qualify for and what kind of interest rate you will be receiving. In the area of commercial loans
, credit scores are less important and do not factor into the equation as much as they do in a residential loan. Of course, having a bad credit score will restrict your options and it’s certainly a good idea to find ways to improve your existing score, but this widely-used financial tool is much less important when it comes to commercial loans.
In terms of a commercial loan, an important factor to bear in mind is the amount of liquid cash you will have on hand after you put a downpayment on your property. It can be tempting to throw every last cent you have into your down payment, but lenders grow weary about this fact as you will have no cash left in the event of an unforeseen event. Something like a serious emergency requiring an insurance claim will make having liquid cash on hand a crucial part to think about. In terms of lenders, they may require you have an additional 6 to 12 months on hand worth of principle and interest payments.
Believe it or not, one of the first things a lender will look at prior to considering you for a commercial loan will be your net worth. A lender will calculate this by factoring your existing assets and subtracting your current liabilities from them. Very often, lenders like to see a net worth which is either equal or greater than the total amount of the loan. For example, if you are seeking a loan for $1 million, you will need to have that amount in tangible, calculable assets in order to qualify for a commercial real estate loan.
If you’re seeking a qualified and knowledgeable real estate firm in the Denver area to assist you through the property investment and development process, Elevation Group is your preferred choice in the mile high city. We offer expert advice and help from start to finish in order to ensure your commercial or residential project is a smooth success, providing you with the needed peace of mind to make your dreams a reality. Contact us today
to begin the process of building your dream property development.