As the economy continues to recover from the pandemic, more people are considering investing in real estate. For those looking to purchase their first building, there are several things to keep in mind.
Commercial loans are a type of loan used to finance the purchase of commercial real estate, such as office buildings, retail spaces and industrial warehouses. These loans can be a great way to secure the financing needed to purchase a building. However, these types of loans canbe complex and difficult to navigate.
For the last 36 years I have had the opportunity to gain wide ranging experience in the financial industry, serving in a variety of leadership roles at several banks in the United States and abroad. Through these experiences, I have gained a deep understanding of the technical aspects of real estate financing and lending. I also have developed a keen eye for identifying risk factors and potential areas of dispute in transactions.
Now, as the manager and broker at NV Capital Corp., I am able to apply all the lessons I have learned throughout a lifetime of commercial lending experience to a more dynamic and sophisticated network of borrowers and investors. A primary benefit of private real estate investing is investor control. As opposed to REITs or other forms of real estate investment, when you invest in private lending, you have the ability to control the investment and make decisions if issues arise. For example, if a borrower falls behind on payments or their loan comes up for maturity and they’re requesting a renewal, the participating investors in the loan have the ability to vote on whether to extend the loan or foreclose on the property. This is contrasted with many other forms of investment that are defined by investor passivity.
Investments in private lending are active, and informed participation is its hallmark. Importantly, private lending and associated investments work well for both the investors/lenders and the borrowers. Borrowers benefit from less institutional bureaucracy, and the investors benefit from added control. Investors and borrowers may have different concerns, and a broker like NV Capital Corp. is well-suited to cater to the needs and expectations of each participant in its private investment deals.
Here are a few things to keep in mind when considering commercial loans for your first building purchase:
1. Know your credit score: A higher credit score can help you secure better loan terms and lower interest rates.
2. Understand the loan terms: Commercial loans typically have different terms than residential loans. Be sure to read and understand the loan terms, including the interest rate, repayment period and any fees.
3. Know your market: Research the local real estate market to understand trends and potential investment opportunities.
4. Plan for the long term: Real estate is a long-term investment, so it is important to have a solid plan in place. Consider your goals and how the property fits into your overall investment strategy.
Once you have secured financing, it is important to consider how to invest in real estate. Real estate can be a great investment, but it requires careful planning and research. There are several reasons why investing in real estate can be a smart choice. Real estate can provide passive income, tax benefits and potential appreciation in value.
However, there are also risks and pitfalls to watch out for. Here are a few tips for avoiding common real estate investment mistakes:
1. Don’t overpay: It’s important to pay a fair price for a property. Overpaying can eat into your profits and make it difficult to generate positive cash flow.
2. Be prepared for unexpected expenses: Be prepared for these costs and factor them into your budget. Unexpected expenses such as repairs and maintenance.
In conclusion, buying your first commercial building can be an exciting and rewarding experience, but it is important to understand the financing process and the role that commercial loans play. With careful research, planning and preparation, you can secure a loan that meets your business’ needs and sets you up for success in the long run.
NV Capital Corp., LLC specializes in private lending, with multiple lenders joining together to fund loans on Nevada real estate. Founded by seasoned commercial bankers who have nearly a century of combined lending in the Nevada marketplace, NV Capital’s team utilizes their knowledge to navigate the real estate market and select prime opportunities for their private investors, nvcapcorp.com. Nevada Mortgage Broker License #4499 | NMLS 1521580. Money invested through a mortgage broker is not guaranteed to earn any interest or return and is not insured. Before investing, investors must be provided with applicable disclosure documents.
John Blackmon is the manager and owner of NV Capital Corp.