Real estate financing might just be the most complex form of debt financing out there because of the staggering diversity of products to choose from. It’s a close call whether real estate is more complex than cash flow financing for businesses, both are among the toughest things to learn when you start working for yourself. Commercial real estate loans get simpler when you remember they are built to purpose, so the goals you have for your investment dictate the right financing choice for this acquisition.

Financing Owner-Occupied Properties

The simplest financing products are aimed at companies looking for their own facilities. Traditional commercial mortgages and SBA property acquisition loans fall into this category, as similar amortizing, fixed-rate products. Bridge loans based on equity accrued in existing property assets are also available but are not limited to just the property investments you use for your operations. Generally, loans of this type do allow for some parts of the property to be leased, but with restrictions like the SBA’s mandate that your business occupies the majority of the floor space.

Loans Designed for Short-Term Investors

Flippers and other investors looking to profit from property improvement, speculation, or other resale-based strategies have their own unique products to choose from. Flipping loans are similar to other bridge loans in many ways but optimized for the one-year or less turnaround that fits the strategy. Some even offer the chance to get interest-only payments with zero down on the purchase, which is good for stretching your capital and making the most of improvements.

For bigger projects, look to something like the milestone-based construction loan package that is offered by many lenders. Using this model of commercial real estate financing provides you with regular capital disbursements as long as the project keeps moving ahead on schedule. Finally, consider using a stated income commercial real estate loan or bridge loan to refinance an existing long-term asset so you can fund the next investment in a short-term one. It’s not always possible, but it can be a powerful strategy for reducing your own bottom line.

Financing Commercial Properties for Long-Term Investors

When you want to acquire rental properties like apartments, homes, or retail space, many of the loan options are similar to financing an owner-occupied place. Commercial mortgages are available, as are bridge loans that allow for short-term financing and improvement before you refinance into something else. If the property is already earning, you can also opt for a stated income real estate loan based on that revenue stream, so there are quite a few choices depending on your current capital on hand and the type of commercial real estate you’re investing in.