When you’re looking to buy your next piece of the Denver commercial real estate
market pie, it’s easy to overlook the loan process in favor of simply fantasizing about what your next big purchase will look like. Indeed, the process of purchasing commercial real estate is exciting and can make you feel like you’re progressing as a smart investor, but it also requires a certain amount of due diligence on your part. Not only do you need to check to make sure that the property you are purchasing checks out from a structural perspective, you also need to make sure that you can actually afford to purchase the property. Before getting too invested into any one property, here’s what you should know about getting a loan for Denver commercial real estate.
What Lenders Look For From Applicants
In order to secure your next big Denver commercial real estate purchase, you will want to make sure that you and your buyers qualify for a loan. Unless you’re lucky enough to have all of the money upfront to purchase the property, certainly a rarity in the business, you will need to seek a commercial real estate loan from a trusted financial institution. In order to make this a reality, you will have to have certain factors lined up.
These factors include things such as your company’s debt service coverage ratio, which is defined as your annual operating income divided by your total service debt needed for the loan. If your business does not have enough annual income to cover both the principal and interest with a certain amount leftover, it will be much more difficult for you to receive a loan. You will also need to have a handle on your personal finance situation, as lenders will look at your credit score and history to determine whether you are a trustworthy applicant.
Lenders will not only just look at your financial situation, but they will also want to have more information about the property you will be purchasing. If a lender doesn’t value the property you are getting a loan for at the same rate as the seller is trying to sell it for, it will be much more difficult for you to convince the lender to give you the amount you seek, as they will view it as a liability.
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 understand that the process of purchasing commercial real estate can be a daunting prospect, and we want to make it as easy and stress-free as possible. 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.