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office buildingOffices and office buildings are used for many purposes. They may be used by managerial personnel with a business production unit located elsewhere, or they may be occupied by a service business that generates revenue from staff billings, such as attorneys or accountants. Commercial loans for offices and office buildings can be used to purchase property and equipment, refinancing, construction of new facilities, and for meeting operational costs. Commercial loans for offices are normally secured with collateral which can be the property itself.


Qualifying for a commercial office building loan can be a difficult task. Lenders require the same planning, research, analysis, and preparation as for other commercial property, and you must meet the lender’s qualification criteria before you apply and get approved. Office buildings with multiple tenants that have good credit ratings can get favorable loan terms.


Office location, size, condition, source, and amount of revenue, management skill, number of tenants, length of leases, tenant turnover rate, and quality of tenants, are physical criteria that are important to lenders. Historic tenant occupancy rates will be closely evaluated. The community in which the office is located is also an important factor and can provide an indication of future revenue potential, since offices are dependent on the local economy. An LTV of 80% is possible, and sometimes higher. The minimum DSCR required is usually 1.2. Loan terms of up to 10 years are common, with amortization periods of 25 to 30 years. Interest rates can be adjustable or fixed.

Last Updated on Thursday, 12 September 2013 14:45

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