Commercial Construction Real Estate Loans
In addition to an appraisal, an independent market feasibility study may be necessary to clearly determine whether an adequate market demand exists for the existing or intended use of the underlying real estate for the commercial construction loan. Focus on the adequacy of the market and feasibility studies. Real estate investors often obtain detailed feasibility studies prior to new ventures involving initial construction or the purchase of existing facilities. Despite the inherent bias in a study commissioned by the borrower, the funding source will typically obtain copies of these reports as they provide substantial data about the potential success of the real estate project. Market research is to include but not be limited to:
- population and business trends,
- available access, i.e., roads, bridges, airports, etc., and any major changes to access
- civic improvements,
- competition for the subject project in its present or expected use
- competition of other business activities
- public or private amenities such as parks, golf courses, attractions, etc.
In order to identify the most advantageous commercial construction real estate lending solution, borrowers should investigate the market carefully and present an effective and persuasive application. Because commercial construction real estate lenders consider a variety of factors, it is helpful to include these important considerations in the initial loan application. CNF Exchange can provide valuable guidance in how to present the commercial construction real estate loan application to best effect in the competitive lending marketplace. By connecting potential borrowers with lenders in this area of commercial finance, CNF Exchange can allow business owners to find the best solution for their ongoing real estate funding needs.