As a real estate investor, there are many reasons why you may refinance a commercial real estate loan—however, you are also likely aware that the Fed has begun raising rates to combat inflation that has now attained a 40-year high. Therefore, it’s likely that you are wondering whether right now is the best time to refinance your commercial loan—or if you should put the brakes on such an endeavor and wait to see what the Fed does next.
In this post, the commercial loan professionals at Filmore Capital will explain what you should consider for your next moves, especially as the future seems uncertain.
If Your Loan Matures in the Next 18 Months, Here’s What to Do
Refinancing your business’s commercial property loan could be an opportunity to unlock much-needed capital, especially since economic uncertainty is still present, even in what many are considering a “post-pandemic” society. Additionally, many businesses are in the process of examining their space needs, and how hybrid or work-from-home models are in high demand by workers. Couple all that together with rising interest rates, continued supply chain disruptions, and a looming real estate loan maturity, and you have the perfect storm.
However, pursuing a commercial loan refinance right now could be a great opportunity as it presents the potential to unlock equity built up through multiple years of real estate value appreciation or amortization of an existing loan. Plus, extra liquidity could offer improved security to your business.
Here is what you should consider:
- Harness power associated with broader real estate capital markets. While your existing bank may be willing to provide a new real estate loan in order to better serve you as a client, utilizing a broader network of lenders could be beneficial in achieving better lending terms. It makes considerable sense to engage a trusted advisor who has access to more options because of their market connections. This could help you in the long run as you leverage their expertise and ability to negotiate on your behalf to find the loan with the best terms.
- Advocate for your property. Lenders are much more strict in their loan underwriting and review processes because of the 2009 Great Recession, the Dodd-Frank Act of 2010, and the recent challenges presented by the pandemic. As such, many lenders are on the lookout for “red flags” associated with borrowers or underlying collateral. However, since no one is more intimate with the use of your property, it is important for you to stay involved in the due diligence process in order to make your case and advocate for appropriate property assumptions, which can spur greater confidence in your application and result in more proceeds available to your business.
- Explore non-traditional real estate financing options. There are a variety of state and federal programs available to offer additional funding to building owners. Local incentives focus on prioritizing economic development within communities and enabling business expansion and commercial relocation. There are other types of non-traditional real estate financing that you can pursue as well—it’s best to speak with an experienced commercial real estate financing professional who can point you in the right direction based on your needs and goals.
Interested in Refinancing Your Commercial Real Estate Loan? Contact Filmore Capital
Yes, it’s true that interest rates are rising, but that doesn’t mean that you shouldn’t pursue a commercial loan refinance. But the time to act is right now.
Filmore Capital helps commercial real estate owners and investors identify the best financing options. We leverage our extensive network of lenders and use our deep experience to benefit your business and help you achieve your goals. Reach out today to schedule a consultation. We would love to help you find a refinancing option that fits your needs.