Commercial real estate interest rates are most important for investment in this business. Property purchased for the purpose of real estate investment falls under “business real estate”. Perhaps there are people who do not know what this is. For those who are planning to start real estate investment in the future.
Federal Reserve Board (Fed) said that the monetary policy report submitted to Congress
Accordance with Yellen’s parliamentary testimony “concern is increasing” in the rise in US commercial real estate, It showed the recognition.
It is the fifth consecutive quarter since February 2015. The FRB sounds a warning to the commercial real estate sector. That is in a monetary policy report once every half year.
In the report of the Fed, the Federal Reserve added that
“Real estate prices continue to rise and capital returns have declined to historically low levels. Concerns are increasing over the past year as the value of the commercial real estate. The valuations is much higher than It has risen. ” However, the risk to the overall financial stability is “moderate”.
The report shows that the commercial real estate debt is still low for the entire economy. The banks have tightened the loan standards but as the commercial pressure rises. Warned that it could be more susceptible to significant drops in commercial real estate.
According to the Federal Reserve’s data, a number of loans made by commercial banks for commercial real estate. The amount exceeded the level before the financial crisis in September 2015 and recorded a record $ 1.97 trillion as of January this year. Small banks are responsible for about 1. 22 trillion dollars.
When looking at the commercial real estate price index calculated by the US survey company Green Street Advisors. US commercial real estate price has more than doubled from the lowest level after the financial crisis in mid-2009.
As a general rule, you can not use mortgage for real estate investment
Real estate investment preparation for purchasing and leasing residential real estate for profit is a business called rental management. Property for investment is real estate for business use, and when using loan you will be building apartment loans and real estate investment loans for business.
A mortgage is a loan targeting “individual” who purchases real estate for the purpose of self-residence to the last. Even if the investment target is real estate for residential use, in principle, it is not possible to use the mortgage as a business purpose. As an exception, if you are building a “combined rental housing” that can also be used as a home, a mortgage may be available.
Commercial real estate interest rates
If you are interested, please consult with the person in charge of the real estate company. Or the loan officer of the financial institution and consider how to use etc.
In the case of mortgage loans, financial institutions such as banks will pay much attention to the repayment ability of individuals borrowing their annual income and business type. However, in the case of a real estate investment loan. The profitability of the project and the profitability of the property are questioned. Also note that real estate investment loans vary in interest rate setting, and interest rates are higher than for mortgage loans.
If you purchase a property purchased from a mortgage for business use, it corresponds to a breach of contract.
Please note that you may be asked for penalties such as full repayment. From a financial institution or refinance to a business loan when it is discovered. Commercial real estate interest rates depend on so many factors.