If you own a commercial property, you’re always looking for ways to enhance your ROI. One strategy is to look into commercial real estate refinancing. For more real estate mortgage solutions, get in touch with Peak Finance today.

Unlock Equity and Get Better Interest Rates

With a home loan, a homeowner can refinance his or her property to either obtain cash or get better interest rates. Similarly, commercial real estate refinancing can unlock equity while at the same time lowering your interest rates.

Get a Consistent Monthly Payment

If you have an adjustable interest rate on your commercial property loan, refinancing with better loan terms can give you the opportunity to get a loan with a single consistent monthly payment. This can be easier to budget for.

Net Operating Income

It’s important to note that when renegotiating your loan, the lender will consider your net operating income — or NOI. The higher your NOI, the more likely you are to get good loan terms.

Example

Let’s say you purchased a distressed property five years ago with a mortgage with an adjustable interest rate. You spent some time and money on renovating it. As a result, you were able to market the units to higher-paying tenants and increase the NOI compared to what it was at the time of purchase.

If you look into commercial real estate refinancing now, you can get a fixed — and lower — mortgage rate while at the same time pulling out equity. And if you use the tax-free cash and the savings from the lower monthly payments to reinvest in upgrading your property even further, you can increase rent and generate more revenue. You could also use the money to acquire a new property, which ultimately would increase your income, as well.

Key Takeaway

If you manage your rental units wisely, you can use refinancing as a vehicle to upgrade your property, increase your cash flow and expand your portfolio.

Sources

https://www.investopedia.com/terms/r/refinance.asp
https://www.lendingtree.com/home/refinance/need-know-commercial-mortgage-refinance/
https://www.wellsfargo.com/biz/business-credit/real-estate/refinance-loan/
https://www.commercialpropertyadvisors.com/refinancing-commercial-real-estate/
https://peakfinanceco.wpengine.com/investment-property/