It’s no secret that commercial real estate investments can be much more lucrative than residential ones. But what if you’re new to investing or have only landed residential deals so far? That’s where small balance commercial lending for small balance real estate comes in.
Real estate investors rely on small balance commercial lending to buy money-making assets like multi-family and mixed-use properties. And now is a great time to do so. Since 2020 Q2, multi-family investors have rented out an additional 1.06 million units and raised rent by 11% year over year.
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A small balance commercial loan is a long-term loan of $250,000 to $5,000,000 that you take out for a small balance commercial property.
Unlike their high-balance counterparts, small balance commercial loans have a faster underwriting process, more relaxed requirements, and more flexible packages. This makes it easier to find financing solutions for small balance commercial properties.
Interest rates can vary based on loan amounts, term length, business credit scores, property types, and after-repaired value (ARV).