5 Mistakes to Avoid If You Refinance Commercial Property

There are several mistakes that people tend to make when they refinance commercial property.  Being unprepared is possibly the common thread when it comes to the five most common mistakes that people make and those that you should try to avoid when refinancing a commercial property.

5 Mistakes to Avoid

1. Opting for SBA Loan Refinancing - This is probably one of the major mistakes that an owner of commercial real estate could ever possibly make.  For one reason, it is an uphill battle when you try to refinance a SBA loan.  Refinancing a commercial property is something that is not easy whatsoever.  The misconception is that a commercial borrower can refinance easily and at will.  If at all possible try to ensure that your financing options are set so that later on down the road you will not have to refinance your property.  Not to mention that the refinanced loan terms could possibly be unreasonable and unattractive to say the least.
2. Ignoring Short Term Financing - If you know that you are headed for refinancing of your commercial mortgage, then you should definitely consider short term business financing as a possible solution to the re-fi problem.  But  many commercial real estate owners completely ignore the signs and the other options available to them.
3. Working with Amateur Finance Brokers/ Non-Commercial Real Estate Brokers - Working with brokers who specialized in residential real estate yet decided to transition over to commercial real estate is not a good idea.  If the broker does not have a background in commercial real estate financing, then it can only be chaotic.  For one thing, a residential real estate broker will not have an expertise in securing lenders for commercial properties.  Not too mention, a residential real estate broker is not equipped to deal with the complexities and intricacies of business loans.
4. Specialized Property Issues - Due to a limited amount of commercial real estate financing that caters to specialized properties, there is bound to plenty of issues.  Specialized commercial properties include golf courses, country clubs, and gas stations to name a few.  Because of their specialized needs in order to secure refinancing for such properties an appraisal will probably be necessary.
5. Being Unprepared - If you do not plan ahead for unexpected financial obstacles, you may very well end up needing to refinance your commercial property.  It is important to consider all financial factors in advance.  Sit down with a business loan advisor and go over any worst case scenarios up front.

Getting Help

Before you refinance your commercial loan, you should consider consulting with an experienced real estate attorney. Your attorney can help you to read over any documents and help you to ensure you get the best deal possible when refinancing your loan.