With the latest restrictions on residential and industrial properties, we have seen an increase in number of enquiries and applications for commercial property loans. What are some of the basic things to look out in a commercial property loan?
Investing in commercial property is deemed to have higher risks compared to investing in residential property. One of the reasons is due to the fact that commercial property is restricted to commercial use only. To banks, it may not be as easy to dispose off a commercial property in times of loan default and repossession compared to a residential property. To the investors, in times of poor economic condition, a commercial property may take a longer time to be tenanted out compared to a residential property, which could otherwise be turned into owner occupied property or tenanted at a lower rate.