Sunday 17 June 2018

Factors To Consider When Looking For Commercial Real Estate Financing Brooklyn NY

By Diane Graham


As an investor, real estate is one of the most lucrative investments you can make. The returns on this investment are high. All you have to do is check the location where you place your investment and your source of finances. With the many available sources of financing, you may consider checking these Commercial Real Estate Financing Brooklyn NY factors.

Determine the risk component of the financing option you make. Check the possible consequences you face when you do not make the payment on time. If it is a bank loan, the lender may repossess the property and sell it to get their money. If you default, your credit score will also reduce significantly. Make sure you do everything possible to ensure you make the payments on time.

Make sure there is a balance between the contribution by owners and the debt financing. The relationship between these two sources is best explained by the gearing concept. Debt financing will seem more beneficial than the contribution by owners due to their tax deductions options. However, contribution by owners faces lower risks even where the business is not performing as expected.

Consider the different forms of available finances in a market. When choosing the best, you should look at the repayment conditions and the existing cost of repayment. The interest rates will vary between different sources. Choose the one with the favorable terms and whose costs seems affordable. In this way, you get the assurance that you will get the funds to repay the debt.

Check the influence of your source of funds on the control and management of your firm. If you choose to issue new shares, you dilute the current ownership by the existing shareholders. Investors who buy your share become part of the ownership of a firm. These will be the people responsible for appointing directors and approving various decisions of a company. If you choose debt and are unable to pay, the creditors may seek to take over your firm.

Check whether your source of finance is either long term or short term in nature. In real estate, you can use long term funding to acquire and develop the property. These will include the use of bank loans or even retained earnings on your profits. Make projections on how you see the cost of raising finance in the future being. Where you note that the long term financing rates will be lower in future, use short term to reduce your current appetite.

As an investor, some of these things may seem complex to you. It is therefore in the interest of the investment you are making that you choose the services of a competent and qualified professional. The person should have a great reputation in dealing with financial matters. If you are careful about this, they will help you make the decision that is prudent for your firm.

In any investment you make, you should consider the possibility of meeting your investment needs. The funding choice you make should be affordable for your firm. Check the risk factors and their repayment schedules, if you opted for debt financing.




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