Super Fitness Health BlogReal Estate loans and the Financial Crisis
It might be that you have been living in a cave in the backwoods somewhere for the last few years, in which case, you may have missed the credit crisis and the lingering effects of the credit crunch, but that is unlikely – either way the ongoing issue continue to make it difficult to obtain investment property loans.
With even the luxury home area of the market feeling the pinch since the so-called “mega loans,” vanished, any investment in property is tempered by the need for substantial deposits and strict borrowing requirements. A minimum of twenty five% is required before any bank would consider making a loan for investment purposes and the only investors taking the plunge are already well funded.
Does one wish to get involved in commercial or residential property investment is the first question the first time investor needs to ask before taking on a loan. There are substantially different requirements, repayment schedules and laws involved. It is possible to do both at the same time, but sensibly, this is not an option for any but the most experienced investor.
Residential loans are obviously available only against houses that are built for residential purposes. Generally, leases usually run for shorter periods than non-residential property leases – less than 12 months is normal and they are renewed yearly. non-residential leases tend to be longer – with perhaps as long as 25 years and almost never less than 5 – a recession notwithstanding.
Loans intended for properties that will have a industrial use; such as warehouses, retail shops, and industrial real estate tend to be of a longer duration than residential loans. Despite the pundits claiming that the world’s economy is now coming out of recession, it is currently difficult to source any type of investment property loan. As such, it may be worthwhile hiring the services of an independent advisor and/or a brokerage service before approaching lenders. Also, do not concentrate your efforts solely with banking institutions – the banks are still as unhealthy as the day Lehman brothers went belly-up and are in no position to lend to anyone other than their preferred customer list.
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