Skip to content

How to get an investment property loan for commercial rental property

One of the last investments a small business can make is in real estate. When businesses are starting out, there are so many frontend expenses, such as inventory, office equipment and furniture, office decor, employee hiring and training, and much, much more. Most business owners seek to rent space for the first few years, and sometimes indefinitely.  The vast number of small businesses in the U.S. alone makes investing in commercial rental property a good investment.

To purchase a commercial rental property, buyers can look for other cash investors or turn to a lender. Most investment property lenders include online lenders, large national banks, and investor-only lenders. Commercial real estate loans have upfront costs averaging between 1% to 5%. Then the buyer will pay 5% to 12% per year in interest. Commercial mortgages are used to finance commercial real estate for mixed-use buildings, retail centers, and office buildings.

FAQs About Commercial Mortgages

Commercial Real Estate loans are generally used for property investors and business owners who want to upgrade or renovate their business space. In 2019, the average commercial real estate loan was $1.2 Million.

1. What types of loans are available for commercial property? 

There are five primary types of loans for commercial properties. These include SBA 7(a) loans, CDC/SBA 504 loans, traditional commercial mortgages, commercial bridge loans, and commercial hard money loans.

2. What are the interest rates?

Interest rates typically range from 5% to 15% on commercial mortgages.

3. How much down payment is required for commercial loans?

Most lenders require at least 10% to 20% of the loan amount. It really depends on the lender and the creditworthiness of the borrower.

4. What terms are available with commercial loans?

The maximum repayment period is set by the lender. Find a lender that meets your business needs. However, SBA 7(a) loans have a maximum repayment term of 25 years for commercial real estate, CDC/504 loans have a maximum term of 20 years.

Do you have questions about commercial lending? Contact a loan expert at Affinity Beyond Capital. We work hard to find you the very best loan options available.