Most often used to purchase or to renovate retail, office, or warehouse space, commercial real estate loans are distinct from non-commercial property loans in a number of ways.
In an effort to shed new light on the matter, Main Street Title‘s Bryan Nazor answers a series of questions commonly asked in relation to commercial real estate lending.
“People most often apply for commercial real estate loans when looking to purchase, or complete renovations too, commercial property or properties,” explains Bryan Nazor, an expert on the topic, and the president of Main Street Title’s New Jersey division.
Main Street Title, headquartered in Hackensack, New Jersey, is, Bryan Nazor says, a one-stop title and settlement services firm, supporting streamlined, fast, accurate, and hassle-free closing.
The topic of commercial real estate lending is often surrounded by numerous questions, according to Bryan Nazor. “Most often I’m asked, ‘How much can I borrow from a commercial lender?'” says Nazor.
While lenders dealing solely with residential properties may offer up to 90 percent of a piece of real estate value, commercial real estate lenders typically offer less, according to the expert.
“A maximum of around 80 percent is common,” he explains, “so borrowers will need to have at least 20 percent of the value in cash, and at hand, at the outset.”
“Another common question tied to commercial real estate lending, and one which I’m asked frequently, is, ‘What rate should I expect to pay?'” Bryan Nazor goes on.
The answer to this can vary wildly, he says. “Expect to pay anywhere from under 4 percent to as much as 10 percent in interest for a typical commercial real estate loan,” adds Nazor.
Third among Bryan Nazor’s most commonly asked questions surrounding commercial real estate lending relates to lender stipulations. “People will ask me what stipulations to expect from their lender,” he reveals.
Among the most common stipulations, according to Bryan Nazor, is that any property is what’s known as owner-occupied from the beginning.
“This means that any retail, office, warehouse, or other commercial space must be occupied to a capacity of at least 51 percent by the borrower alone before it can be occupied by anyone else alongside them,” he explains.
In addition to heading up Main Street Title’s New Jersey division, Bryan Nazor is routinely involved in the firm’s commercial closings.
Here, he says, he presides over client closings in order to ensure that the proper procedures are followed and that all appropriate documents are signed, notarized, and acknowledged.
Lastly, Bryan Nazor turns to qualify. The commercial closings expert says he’s often asked about whether an individual or business is likely to be approved or not for a commercial real estate loan.
“When asking if they’re likely to qualify, I’ll often tell an individual or business that it’s impossible to give a yes or no answer,” says Bryan Nazor. “My only advice in this instance,” he adds, wrapping up, “would be to apply.”