Investing in Commercial Real Estate with a Financial Business Partner
In nearly any business venture, it’s a good idea to limit your exposure, especially when it comes to capital. Being solely responsible for the financing of a startup, whether through your own money or that of lenders or investors, can be a huge burden. While commercial real estate is usually a great investment, it takes a lot of cash to get started down a successful road. For many enthusiastic entrepreneurs, taking on a financial business partner is an appealing prospect. Here are some of the things they can bring to the table.
Money Management Expertise
The key to choosing a financial business partner in a commercial real estate venture is to identify someone with a proven track record. A successful partner will know the ins and outs, as well as some of the potential hazards of the business. They know how to budget, especially in the area of expecting the unexpected. Their experience and expertise can help you make strong business and financial plans.
Overcoming the Down Payment Wall
Usually, the biggest cost associated with commercial real estate is the down payment needed to buy your property. The less you have to borrow the better, or, put another way, the more you can put down, the quicker it will be paid off. Sharing this expense with an experienced financial partner can make a huge difference, whether you’re looking to save money, or pay off your debts quickly!
Improved Access to Information and Opportunities
An experienced financial business partner will come to the table with helpful relationships. Trustworthy vendors, contractors, and financers (more on that in a minute), can be hard to find, or it may be difficult to get in their door if they’re in demand. If these people know and trust your business partner, however, many of those doors may open for you quite easily.
Relationships Lead to Preferential Debt
Your financial business partner’s relationships with financers, whether they are traditional lending institutions, angel investors, or alternative lenders, can help you in a way that many people are not familiar with. Lenders who have long-standing relationships with good customers may extend what is known as “preferential debt” to them. In essence, you receive a good deal at a low cost, generally through lower interest rates or a longer term. The better established your financial business partner is, the more likely you will have opportunities to receive preferential debt for your commercial real estate project.
For all of these reasons and more, a good financial business partner can be worth their weight in gold!