Owner Occupied Real Estate Loans
If your own business will occupy the building you are buying, you will probably want an owner occupied loan.
When you apply for these loans, lenders will look in depth at your company to see if it is making enough money to cover the mortgage payment. The rent you pay as a tenant to yourself as property owner is irrelevant. Business earnings are what matters.
Many lenders consider these loans to be less risky than income property loans because they can scrutinize the tenant business so thoroughly. A lender will finance up to 90% of the purchase price, and the rates and terms will be quite favorable. These loans do have some strings attached. They must be guaranteed by your business and generally by all the major business owners. The business guarantee usually does not mean a lien on company assets or a UCC filing. It just becomes a contingent liability on your company's books.
Three Owner Occupied Real Estate Loan Options
Option 1 - SBA
The SBA (US Small Business Administration) provides the best known examples of loans analyzed this way. SBA loans are popular because they usually finance 90% of the purchase price and often are fully amortized.
We have provided in this site extensive information on the SBA program, including details on what businesses are eligible. Click here for more on SBA Loans.
Option 2 - Conventional
If you only need 75% or perhaps 80% loan to value, a conventional loan may be your best choice. Some of these loans offer lower rates and fees than SBA loans. They also have more flexible loan requirements.
Option 3 – Middle Market
If you own a company with sales of about $20,000,000 or more, there are “middle market” company lenders that may want to do the loan. They offer very low variable rates and fixed rates for longer periods of time. They also might consider loans at 85% LTV.
Construction Loans
With any of the three types of loans above, you also have the option of constructing your own new building. Some people build because they cannot find the right existing building. Other businesses have special physical requirements, so designing the structure makes the most sense. For others, designing their own building provides a special pride of ownership.
See our discussion on construction loans.
Rozelle Financial keeps track of the lenders within these options to help you find the best program and the best rates for your needs. Call or e-mail us today for more information.
