Thinking of Financing Your Office Property?

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From traditional offices to co-working or flex space, LoanBase has the right lender for you.

Some of Our Office Loan Programs

Bridge Financing

Loan Size

100k - $10 million

Program Territory

Nationwide (excluding NV, AZ, ND, SD)

Loan Type

Purchase or Refinance

Loan Term

Up to 18 months (extensions available)

Long-Term Rental

Loan Size

$75k - $20 million

Program Territory

Nationwide (excluding NV, ND, SD)

Loan Type

Purchase or Refinance

Loan Term

5/1, 7/1, 10/1, 30yrs fixed

Ground-Up Construction

Loan Size

100k - $50 million

Program Territory

Nationwide (excluding NV, ND, SD)

Loan Type

Purchase or Refinance

Loan Term

Up to 24 months

Renovation and Rehab

Loan Size

100k - $10 million

Program Territory

Nationwide (excluding NV, AZ, ND, SD)

Loan Type

Purchase or Refinance

Loan Term

Up to 18 months (extensions available)

Benefit from our experience in

Mixed-Use Properties

Connect with top lenders to purchase or cash-out refinance your mixed-use property.

Medical Office

Find the right lender whether you are a doctor or dentist looking to purchase your own clinic or an investor leasing space to medical practitioners.

Multi-Tenants

Secure financing to reposition an underperforming multi-tenant property or simply refinance a stabilized property.

Types of Office Financing

Acquisition

Close your purchase smoothly and on time thanks to our automated loan process

Cash-Out Refinance

Maximize your cash out refinance with our high LTV products

Refinancing

Secure better rates and terms for your investment by accessing our network of 500+ lenders

Bridge Loans

Take advantage of our competitive rates on bridge loans and options to roll over to longer term loans

Rehab/Improvement

Connect with lenders that have experience financing remodeling projects

office loan resources

Commercial Loans: What They Are & How They Work

Commercial Loans: What They Are & How They Work

Commercial loans help business owners and real estate investors make large purchases or fund operations. There are several types of commercial loans, and most are available through traditional banks and online lenders. Rates, loan amounts, and terms vary by financial institution, but borrowers can generally access up to 75% to 80% of project costs, at rates starting at 3% to 4%. What Is a Commercial Loan? A commercial loan is a type of funding offered to businesses through traditional banks and online lenders. These loans are most commonly used to pay for major capital expenses and to cover operational costs. This type of financing is often secured by specific collateral —such as real estate or machinery—although this is not always the case. Business owners can typically choose from products like conventional term loans, business lines of credit, as well as commercial real estate loans (CREs) that finance the purchase of commercial properties like office buildings, manufacturing facilities, and shopping centers. How Do Commercial Loans Work? Commercial loans are extended by traditional banks, credit unions, and other financial institutions, as well as by online lenders. The application process for these loans varies by lender, but it typically involves providing documentation of the business owner’s personal finances and business finances. Depending on the borrower’s needs and creditworthiness, loan amounts can vary from several thousands of dollars up to several millions of dollars. Annual percentage rates (APRs) start at 3% or 4% and go up to 20% or higher, depending on the loan type and the borrower’s credit history. Once a commercial loan is approved, funds are disbursed to the business account and interest begins to accrue at the agreed rate. Payments are made monthly for a set term—typically up to five or 10 years, but this number can be up to 20 or 25 years for some federally insured programs like those backed by the Small Business Administration (SBA). Unlike traditional term loans, commercial loans are often not fully amortized, which means that a loan may have a five- or 10-year term, but have a 25-year amortization schedule. This results in a balloon payment that must be paid in full or refinanced at the end of the loan term. Types of Commercial Loans Depending on your line of business, you may think of commercial real estate loans or bridge financing as the most common type of commercial loans. However, there are several commercial lending options designed to fit various borrowing needs. Each loan type comes with its qualification, approval, and funding processes, as well as unique interest rates and loan to value (LTV) ratios Commercial Loan Rates Loan Type Average Rates Average LTV Ratio Traditional Bank Loans 5% to 7% 80% Commercial Real Estate Loans 3.77% and up 66% to 73% Commercial Construction Loans 4.75% to 9.75% 75% Bridge Loans 4.20% to 12.20% 80% Hard Money Loans >10% to 18% 60% to 80% SBA 504 Loan 2.231% to 2.399% 90% Term Loans Term loans are traditional loans with a fixed term—or payment schedule. These loans can be short-, intermediate-, or long-term with repayment extending from three months to 10 years. Once funds are disbursed, borrowers make monthly or quarterly payments that are composed of both principal and interest. Annual percentage rates may be fixed or flexible, but usually start around 9%, with loan amounts as large as $500,000. Commercial Real Estate Loans Commercial real estate loans are loans secured by commercial property. These loans can be used to acquire, renovate, demolish, or otherwise invest in commercial real estate. Properties can take the form of offices, stores, hotels, or any other property operated for commercial purposes. Commercial Construction Loans Commercial construction loans are ideal for businesses that want to build or significantly renovate a commercial property for their own purposes. These loans are often structured with an initial draw period, during which business owners or their contractors can gradually withdraw money as work is completed. When construction is complete the loan converts to fixed-rate term financing. Bridge Loans A bridge loan is a type of high-interest, temporary financing with loan terms usually limited from six to 12 months. In general, bridge loans are used to help a business owner close a deal before they’re able to secure long-term, fixed-rate financing. These loans are ideal when a deal has to close quickly or a business owner needs to sell or refinance other assets before securing long-term financing. Business Lines of Credit A business line of credit is a form of business financing that can be accessed on an as-needed basis. Annual percentage rates range anywhere from 10% to 99% and borrowing limits extend from about $2,000 to $250,000. In contrast to a traditional commercial loan, a business line of credit is used on a revolving basis, and interest is only paid on the portion of the credit line being accessed—or what the borrower actually uses. With this type of financing, a business owner can access a line of credit until the draw period—typically as long as five years—is over. If the business owner repays a portion of what they’ve drawn against the line of credit, they can access those funds again. After the draw period, the repayment period begins, and the borrower must make monthly payments on the outstanding balance, including interest. Equipment Financing Business owners who need to purchase large equipment or machinery may benefit from equipment financing. This type of commercial loan can also be used to purchase smaller items like office furniture and electronics and is secured by the underlying collateral—the items purchased with the loan funds. Equipment loan amounts vary based on the items being purchased but tend to range up to $1 million or higher. Interest rates vary by lender and borrower creditworthiness, but are often lower than some other forms of financing and extend from around 8% up to 30%. Terms are also flexible and can range up to 25 years. SBA Loans SBA loans are business loans issued by banks and backed by the U.S. Small

Office Investment Properties

Office commercial properties (also known as office CREs) are used specifically for conducting business and workplace-related activities. Some businesses that occupy office commercial real estate own the property they reside in, while others don’t. Businesses that don’t own their own buildings typically rent from an investor or landlord. Office commercial leases tend to average 5 – 10 years. Factors like duration of stay, location, and size will impact the interest rate that lenders charge for commercial office buildings. In this article, we’ll explore different types of office spaces, explain their investment upside, examine different financing options, and give an overview of some of the best places to purchase commercial office space. Let’s dive in. Types of Commercial Office Properties In this article, we’ll look at 5 common types of commercial office properties: business parks, multitenant, medical, dental, and user-owner. Business Park Business parks are areas of land, owned by real estate corporations, where many office buildings reside close to one another. They’re usually developed in suburbs, and they typically offer cheaper lease agreements due to lower construction. Business parks used to be a staple in commercial office real estate. However, in recent years the development of these properties has slowed for numerous reasons: increased options for builders, a decrease in companies requiring in-person office work, and a general aversion to “archaic” design. That said, in recent years builders have designed more “modern” business parks to appeal to changing design sentiments. Multitenant Offices Multitenant office properties offer multi-tenant leases, which let several different businesses occupy the same general space. These leases often require that tenants take added responsibility or pay additional costs beyond just rent. For example, tenants might pay for select utilities or relevant costs to maintain the physical property. The property owner divides these costs among the tenants. Multitenant office properties offer 2 main advantages for potential investors: Lease length Multitenant lease agreements average around 7-8 years. Tenants fill up vacant spots quickly, and more tenants mean more rent money for investors. Additionally, even if a tenant leaves, you’ll still generate rent money from other tenants, which mitigates your losses. It’s rare to ever have a fully vacant multi-tenant property. Efficiency Owning several properties in several different areas makes it harder to effectively manage your investments. The ability to manage tenants in the same space is a major upside of multitenant office properties—this also limits the number of transactional procedures and fees you might face. Medical Offices Medical offices are commercial office properties designed to support health care practices and medical activities. They’re physically designed to accommodate the needs of medical practices and to enhance the patient experience. As a property owner or investor, keep in mind how the appearance of your property will affect tenant success. In other words, nobody wants to walk into a medical office that feels “overly clinical” or that isn’t well-designed. Similarly, think about location. The physical property should be easily accessible to major roadways and also provide plenty of parking. Always consider these factors before investing in a medical office building. If you’re leasing out a medical office building, consider the other medical offices in your area. While you want to avoid competition, remember that not all medical offices offer the same services. It might be beneficial to lease near another medical office property if that property offers highly specialized service and if your tenants offer a complimentary service or can receive referrals from them. Dental Offices Dental commercial office properties are similar to medical office properties, but they also have their differentiating factors. Just like other medical office buildings, dental offices are designed around a specific medical practice—in this case, dentistry. Given that purpose, they’ll usually have different rooms designed for multiple patients, certainly required utilities per room and specified rooms for certain dental service machines. Leasing dental commercial properties aren’t the same as leasing other forms of office real estate. Typically, dental offices are owned by dental professionals—they aren’t leased by a landlord. Although this isn’t always the case, different factors—the hassle of moving equipment, advertising the move, or issues with the volume of business upon moving—make it difficult to find occupants for a vacant property. We’ll discuss financing options later in this article. User-Owner Offices User-owner offices are office properties where the occupant of the space also owns the space. Technically the property owner must own at least 51% of the office space to be considered user-owner. User-owner property owners tend to present more financing options than other office property types. For example, the SBA 504 loan option gives some of the best financing options available for these properties. Remember that many user-owner properties for sale might be vacant or soon-to-be vacant. It might be difficult to find and retain tenants for these properties. Do your research before purchasing these properties. Why Invest in Office Commercial Property? Commercial office properties present numerous advantages over residential properties. Here are some reasons to invest in office commercial properties. Income Commercial office properties present significantly higher average annual returns (6-12%) than residential properties (1-4%). Additionally, while residential properties generate most of their value through appreciation, commercial office properties also generate value from tenant rent—this high-yield, a constant stream of income appeals to most investors. Lease control Commercial office properties give property owners a high level of control. Unlike residential properties, commercial office real estate isn’t subject to certain bylaws and regulations. As a commercial property landlord, you’ll control everything from lease length to deciding which tenants pay for what utility. Increased control over your property means less trouble for you. Direct and Indirect Investment Commercial office properties offer two main investment opportunities, both of which might be attractive, depending on your financial situation. Direct Direct investment—this is what most residential investors do—means owning and monitoring the property. If you have a high net worth or can generate enough financing, this can be a great option. Indirect Indirect investment means investing in marketable securities. These securities then invest in commercial real estate stocks

Office Building Classifications

All real estate buildings are classified as one of the following three letters: A, B, or C. Their classification is based on numerous characteristics. This classification categorizes buildings and helps investors, developers and tenants narrow down the type of building that they are looking for.