Commercial real estate financing is defined as a source of funding of services for the commercial real estate business. In today’s world, there is an incessant accessibility to commercial financing for investment properties. There are many commercial real estate agencies that are ready to finance inspite of the fact that the frequency and magnitude of investment properties are affected by the market conditions.
In general, financing of commercial real estate happens as a result of a number of pension funds and insurance companies. The sources of finance for commercial real estate from pension funds and insurance companies can be done either through mortgage banking firms, correspondents, loans and savings institutions, specialized firms and regional banks. For some specific emphasis, those firms which specialize in financing real estate business could play the role of conduits incase of “Wall Street money”. Apart from this fact, a majority of the resources observed the fact that every source for finance for the commercial real estate business generally has a dynamic scope of investment.
To ensure that more stress and weightage is given, insurance companies are the major sources of financing when it comes to lending of funds for the commercial real estate business. For a longtime, insurance companies have been a source of financing, who have been contributing about 20-25 percent of the assets for real estate financing. This percent has been consistent for some time now.
In addition to this, insurance companies fund commercial real estate companies either directly with local or regional offices or through a correspondent scheme which involves even the commercial real estate brokers and the commercial mortgage bankers. For financing commercial real estate business, the companies are customized for negotiating directly with the borrowers.
In the area covering commercial real estate finance, the role played by the commercial real estate agent has been expanded so that the knowledge of the commercial real estate broker with respect to lending climate and situations of commercial real estate. This helps to efficiently process and package the loan needs of the borrower in terms of real estate financing. A packaged loan which is customized as per the needs of the customer, the financial needs of the commercial real estate company can be successfully met.
Lastly and most importantly, several factors should be considered and given importance when we speak about commercial real estate financing. All these factors which relate to commercial real estate financing all the financial statements on borrowing entities, the income & expense statement, complete survey and plans for the property, performance appraisal and many more such important matters and accounts.
These stuff acts as a major source for financing for the commercial real estate business as well as other related real estate financing issues. Thus, the financing agencies are able to effectively and efficiently cater to the specific needs of the commercial real estate businesses. Therefore, all those materials that are involved in the financing of the commercial real estate business should follow a clear cut and systematic process.