Are you thinking about investing in real estate but don’t have enough funds? If so, you should consider real estate financing.
Generally, real estate financing involves an investor (your business) securing capital from an outside source for an impending deal. This can be to renovate or purchase a property. Financing real estate comes complete with terms and underwriting that you need to understand before signing any contract.
There are different real estate finance options and what you choose depends on your business strategy. Therefore, you need to take the time to research the various options before finding one that compliments your business.
Benefits of Real Estate Financing
Real estate financing is beneficial to many businesses, whether large or small. Here are some benefits of real estate financing.
1. Increased Cash Flow
It’s no secret that running a business implies numerous expenses, from payrolls, bank fees, and interest to rent and insurance. Unfortunately, you’re bound to face financial hurdles at some point in your business career, which can adversely impact your cash flow.
Luckily, with real estate financing, you only need a minimum initial investment to purchase or buy the property you want to invest in. This comfortably spread payments over time, allowing your business to preserve valuable working capital for future operations and growth.
2. Align Payments with Benefits
According to studies, investing in real estate has high returns (about 25% p.a.) compared to other class assets. And, since the term of real estate financing is usually the same as the length of the perceived benefit, you can acquire more of what you need than what you have to spend.
Therefore, instead of having to pay a lump-sum of money to purchase real estate, you’ll make monthly payments, allowing you to generate revenue and reduce expenses.
3. Builds Business Credit
Business credit plays a significant role in obtaining capital in the future. For instance, when your company requires financing for a certain project, lenders and financing institutions look at your business credit to determine your financing options, rates, and interests. That’s why you need to build your business credit by making timely repayments on your loan.
4. Preserved Bank Lines of Credit
Companies use financing to keep their business running. Real estate financing is an additional funding source that doesn’t reduce or tie up credit lines established at other financial institutions such as banks.
5. Flexibility and Convenience
Real estate financing gives businesses the flexibility to customize their loan terms, depending on their specifications and budget. For instance, you can customize your terms and structures based on your company’s seasonal income fluctuations and your cash flow particularities.
Additionally, the application process for real estate financing is quick and easy, ensuring you can respond to industry trends, business needs, and technological advancements. If your business has a slow season, you might want to consider seasonal payments to keep your business running smoothly.
Need Real Estate Financing?
At Key Capital, we provide businesses with comprehensive financing solutions to suit their needs.