Retail Property Financing
“Retail Property Financing Available From Our Commercial Mortgage Lenders”
Today we’re going to talk about retail property financing for structures such as strip malls, plazas, big box stores, and so on.
When institutional lenders are considering a retail building mortgage application they immediately are going to focus in on things such as the location, the strength of the retail rent and lease market in that area, the strength of your tenant rent roll if you are renting, or your business financials if you are self occupied.
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Commercial mortgage lenders that will look at providing financing for a retail building will typically fall into one of three different categories.
The first category would banks and other institutional lenders. While the cost of financing is going to be the lowest from this group of commercial lenders, the lender requirements are also going to be the highest to assure that rate and risk are in proportion.
The second category of commercial mortgage lenders for retail building financing would be sub prime or quasi institutional lenders such as investment banks, hedge funds, and other forms of organized investor capital interested in commercial real estate financing. This form of financing is ideally suited for those applicants that are just below the requirements of bank financing, or for applicants that are not going to have sufficient time to complete or meet the lending and funding requirements of a bank or institutional lender in the time that the applicant has to work with.
The rates for a sub prime retail building mortgage are going to be slightly higher, but the requirements are also going to be less stringent as compared to an institutional lender.
The third category of lender for retail property loans is from private mortgage lenders, which are effectively short term bridge loans to deal with some combination of tight timelines and funding constraints that can’t be satisfied by the first two categories of lenders.
Application Process And Timelines
For Completion And Funding
The application process is going to include a general disclosure of business owner information, financial statements, appraisal reports, environmental reports, rent rolls, tenant profiles, and anything else that is relevant to a particular situation.
Even though an “A” lender may require more information, fundamentally all lenders will require the primary information listed above. Sub prime lenders and private lenders may be more flexible in working with the information provided which can result in funding approvals that may otherwise not be possible with a bank or institutional lender.
The timelines to completion from application to funding will typically fall in the 30 to 60 day range. This can also go beyond 60 days if additional time is required to get third party reports in from accountants, appraisers, consultants, etc., as each of these service providers will be working within their own work schedules which may not always correspond with your own planning timeline.
Keys To Retail Property Financing Success
The two main keys to retail building mortgage financing is to 1) make sure you have sufficient time to work through the process, and 2) work with an experienced commercial mortgage broker who can get you working with the most relevant lenders as quickly as possible so that you are able to meet your funding requirement in the time you have to work with.
If you require retail property financing, I suggest that you give me a call so we can go through your requirements together and discuss different commercial mortgage options that are available to you.
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About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel