Buying a commercial property in Calgary can be challenging if you’ve purchasing a business or want to invest in a commercial property. In some ways, it’s not too much different from buying a residential property but there are some obvious and even a few major differences. The main thing to consider if you’re thinking of buying a commercial property is that your success is going to hinge on 2 main aspects. The first is how credit worthy you are, and the second major factor will depend how credit worthy is the business itself.
Doing some basic homework and having some good advisors who specialize in commercial real estate behind you will greatly enhance your ability to make a good deal and a sound investment.
There are different types of financing available depending on the project. It largely depends whether you are buying an existing commercial property or are looking to build one. Financing for developing or building a commercial business property from scratch is different as you may require several loans such as long or short term loans that address construction requirements.
Make sure you have a detailed plan laid out on how you will be using the property as the lender will want this clearly spelled out. You will likely have to carry out an environmental assessment and the lender will likely insist on this as a condition.
One of the first things you will want to do is not try and throw all your eggs in one basket with a single lender. You will want to be able to compare rates and closing costs. You also want a lender who is dependable.
You also want to be learn all you can about the commercial real estate market in both the area you reside and particular location where you want to buy or build your business. You want to fully understand the current and future commercial property trends, available properties and how much these properties are going for.
Types of Commercial Loans
You have two options when you approach a lender. First, you can get a commercial loan in your name. The second option is to get a commercial loan in the name of the business if the business name is properly registered.
Qualifying for a commercial loan pretty much follows the same basic principles as getting a residential property loan. Both you and the business need to have a positive credit history and be able to prove your ability to be able to re-pay the loan. Lenders will want and expect to see that both you and the business entity have a solid credit score.
You will also be expected to provide detailed proof on your current and past income for yourself, the business entity or both. The lenders will also be concerned about whether your business venture will be able to generate a profit and how much.
Generally, you will be expected to put a down payment on the property, so don’t expect to get 100% financing, because you won’t get it. As a rule of thumb, most lenders will be expecting a down payment in the range of 20%.
If you’re new to the game, you should sit down and chat with both a commercial real estate agent and a commercial real estate broker so you clearly understand what to expect and how to be properly prepared.
Photo by daniellescott
