Investing in commercial real estate is a solid way to diversify your portfolio and make a living. You will want to research different funding options for these investment properties before jumping into the market, as these financing sources will help you make the most of your time, money and effort.

Traditional Mortgage Loans

Traditional mortgage loans are the most popular way to finance commercial or residential real estate purchases, and if you already own a home, you will be familiar with the process. Mortgages for commercial properties will involve more money than residential real estate purchases. Still, the process is essentially the same, and your loan officer can help with any differences.

Hard Money Loans

Hard money loans are short-term lending solutions that work well for commercial property investments because they focus more on the property’s value than your creditworthiness. Because these loans only last up to three years, they are better used on properties with a quick turnover rate, such as fix-and-flip projects, than on real estate you plan to retain for a long-term investment.

Fix-and-flip Loans

Fix-and-flip loans for commercial real estate are short-term loans that can be secured through traditional lenders, private investors or crowdfunding websites. The appeal of fix-and-flip for commercial properties is that you will receive your returns when you sell the property and not wait for monthly rent checks or deal with tenants. With this type of investment, you purchase the property, build, update or renovate it, and then sell it quickly, usually in three or fewer years.

Private Money loans

These loans come from average people looking to invest in real estate and turn a profit. These can be people you know, users of investment websites or investors you meet through industry contacts. It is critical to remember that your private money investors can foreclose on your property if they are not repaid according to contract terms.

Home Equity Loans

With this funding project in mind, you can use your home equity to finance commercial property investments by refinancing your mortgage. YOu will be subject to a credit check, and your home will need to be appraised before qualifying for this type of loan, and it is critical to remember that if you do not make regular payments, you could end up losing both properties.

It is important to remember that the funding options for residential and commercial real estate investments are similar but differ in critical points, such as the amount of money involved. This means that you may need additional research and comparisons depending on the property type you are looking at for investment.