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Commercial Property Financing
Commercial Properties Considered
Commercial property types Superior Funding focuses on include multi-family 5+ unit properties, office buildings, mixed-use properties, office condominiums, retail space and light industrial facilities (no heavy machinery). Property must be finished, in good condition, free from hazardous materials, and either leased or owner occupied for business.
Commercial vs. Residential Financing
Commercial financing significantly differs from residential. When evaluating a transaction, more attention is given to the property than the borrower (except borrower’s credit history), and no “pre-approvals” can be issued without knowing the property income and expenses in detail. Borrowers should be aware that rates and costs are higher than those applicable to residential property loans, and that larger down payment amounts are required.
Commercial Property Valuation
Commercial property value is largely based on the property's income and expenses. The asking price is considered reasonable if the property produces expected return on investment. For qualification purposes, gross income is adjusted for industry standard vacancy, repair and maintenance, management, and replacement reserves. Then the sum of all property expenses is subtracted from the adjusted income to obtain net operating income. Net operating income, along with rate of return considered normal for the property type and location, yields the model-based property value, which should be close to purchase price.
Owner-occupied commercial properties are valuated similar to investor commercial properties, except the qualifying income is based on market rents instead of leases. To establish the qualifying income for an owner-occupied commercial property, commercial appraiser would estimate how much income the property would generate if it were leased out.
Environmental Issues
Commercial property should have no history of environmental accidents. A property with prior environmental issues must be assessed to show that contamination levels are currently below background. If contamination levels exceed background, corrective actions must be taken to restore contamination levels back to normal before the property becomes eligible for financing.
To inquire about a commercial loan online: please use commercial inquiry form.
To obtain more information over the phone: please call 617.938.3900, option 5.
 Superior Funding Corporation - 716 Main Street, 2nd Floor - Waltham, MA 02451 Office Phone: (617) 938-3900 Fax: (617) 395-2671 Toll Free Phone: (800) 506-5706
 
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