There are always challenges facing the commercial real estate industry, but you can adapt and overcome them if you make the effort. It also helps to have some knowledgeable people on your side, like a Long Island, NY real estate closing lawyer from our firm. We are always keeping up with the latest developments in this market, so we are more than prepared to tell you more about some of the financing challenges you may face as you work on your next commercial real estate projects.
What Are Some Financing Issues to Think About When Dealing with Commercial Real Estate Projects?
You can always expect to run into some obstacles when starting up new commercial real estate projects. Let’s take a look at some of the current challenges and how financing can be one of the more difficult parts of the entire process:
High interest rates: Recent rate hikes mean that loans for real estate are going to end up costing you more in interest than they would have in previous years. This is not an insurmountable problem for any successful project, but it could affect those that are a bit riskier or less likely to see a return soon.
Difficulty in qualifying for new loans: Banks do not always want to give out loans for speculative commercial real estate projects. At the same time, these projects require a lot of money, and it is hard for one investor to put down the needed money on their own. So, at the moment at least, it is definitely easier to pursue projects if you have multiple investors or alternative lenders to lean on.
Strict loan requirements: Some loans have strict conditions, including provisions for balloon payments. You may, for example, be asked to pay back the entire loan amount in one lump sum at the end of the loan term. This is not always feasible, so shopping around for loans with different kinds of terms is a must.
Why Should I Still Consider Adding New Commercial Real Estate Projects to My Portfolio?
So you might look at the above challenges and wonder why you should move forward with your next commercial real estate projects at all. Maybe you should wait. Perhaps there will be a better time to pursue them in the near future. In most cases, we do not agree with this kind of thinking. That is because there are still many advantages to investing in such projects. Commercial real estate projects offer:
- A relatively stable investment mostly insulated from other market forces
- A predictable rate of return
- An opportunity to occupy specific niches where there should be continued demand
There is often no good reason to abandon a project just because there are funding challenges and other obstacles to worry about.
Schedule Your Consultation Today
If you want to learn more about what our law firm can do for you, contact David A. Gallo & Associates LLP. We would be happy to schedule a meeting and tell you more about our capabilities. Call us today or contact us through our website. We look forward to hearing from you.