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What you need to know about CRE loans

On Behalf of | Feb 8, 2022 | Real Estate Transactions

Commercial real estate in Tulsa can be a lucrative investment, but it may be hard to get into if you don’t have a lot of money to invest upfront. In a case like this, you may need to take out a commercial real estate, or CRE, loan. Here are a few tips on what you need to know about CRE loans.

How does a CRE loan work?

A CRE loan is a great way to raise money for your next series of business transactions. The typical length of a CRE loan can range anywhere from 15 to 25 years. Many CRE loans are subject to a balloon payment that will normally be due in 1, 2, 5 or 10 years depending on the terms.

You should also note that the typical rate of interest for a CRE loan will be somewhat higher than for a commercial loan. They are usually in the range of 5-10%. They can also range much higher depending on the type of loan that you are procuring. This is a detail that needs to be worked out in advance.

There are a few CRE loans that can offer you a fixed rate of interest, but most loans of this type tend to be adjustable. Adjustable rates will be tied to an index that will ebb and flow with the rhythm of the market. It can reset itself when the mortgage note dictates. This can be monthly, quarterly or annually.

How can you procure a CRE loan?

It’s a very good idea to seek legal and financial aid before embarking on a complex financial arrangement of this kind. The help you get can save you from being locked into a ruinous rate of interest.

There are a number of sources that can help you qualify for and receive a CRE loan. You can talk to your local bank or independent lender. You can also contact your insurance company or pension fund. If all else fails, there are private investors who may be willing to work with you.