Avoid These Common Commercial Real Estate Mistakes
When a business is starting out, it’s common for it to need commercial loans. If you’re in the market for commercial real estate and plan to use a loan, then you need to be aware of some of the most common mistakes so that you can avoid them. The wrong mistake can land a business in a lot of financial trouble.
Not Doing Research
Always do research and make sure that you’ve done your due diligence. Review commercial loan terms and check out different lenders.
Not Selecting a Lawyer
Some businesses forget the importance of a competent lawyer. Real estate lawyers have the experience that you need for solid real estate advice.
Not Having a Business Plan
A business plan is crucial when applying for a loan. The lender has to see that your business has the potential to survive so that you can pay back the money.
Not Having a Plan for the Money
Lenders want to see your plans for the money in advance. Without a plan, you may lose your opportunity or you could end up rejected.
Not Having Cash Ready
Before you apply for a loan, you have to have some cash on hand. Most lenders want to see that you have some money available.
Not Negotiating for a Deal
If you have a competent attorney, you may have a better chance of negotiating a solid deal. Keep in mind that with every loan, you can negotiate for the best deal possible.
Not Reviewing the Balance Sheet
Always analyze your cash flow and liabilities, to begin with. This will help you make sure that you will have enough money to run your property even with your debts.
Not Looking for an Unfamiliar Lender
While it’s good to have a relationship with a lender, you don’t want to settle for the first one that you consider. After all, there are new commercial real estate products offered all of the time. You may want to look into other options.
Not Looking Into the SBA
The SBA has a lot of different loans available for small businesses. Before you settle, make sure that you check with the SBA to see what kind of advice they have for your situation.
Not Having Documentation
Get all of your documents together at the start. You should have everything that your lender expects you to have so that you can prove that your project makes financial sense.
When it comes to a commercial real estate loan, you have to make sure that you have all of your plans together, the documentation necessary and finished your research. The more you know about the process, the more likely you are to get the funding you need.