NY commercial real estate markets are booming throughout the state. From simple renovations to flipping houses, to grand construction projects, New York investors are generating revenue hand over fist. Yet despite a healthy market backed by a strong economy, getting approved for a loan from a traditional lender can still seem like an uphill battle. There are many seemingly arbitrary reasons why NY commercial real estate investors get turned down for loans, but there are also alternatives, designed specifically for CRE projects, that can be arranged and approved quickly and efficiently.
NY Commercial Real Estate Scares Banks
Over the past decade, banks and similar lenders have taken a big hit on commercial real estate. During the first housing bubble of the 2000s, banks were practically giving away capital for commercial real estate ventures. Properties were renovated, flipped, and both investors and lenders made a profit. Once the recession hit, lenders were left with partly finished projects and a lot of loan defaults. In order to get back on their feet, lenders raised the requirements on loans to prohibitively high levels, and have not backed down from that position.
Traditional Lenders Shy Away from Lone Wolves
The great appeal of commercial real estate is that anyone can turn it into a profitable business, with the right planning and capital. Traditional lenders see things differently because having one person responsible for overseeing a project and the finances is considered incredibly risky. Banks view NY commercial real estate investors as sole proprietors. That categorization is one of the main reasons for loan rejections – not just for commercial real estate, but for small businesses throughout the state. What happens if the person encounters budgetary miscalculations during a project? What if the CRE investor becomes incapacitated or worse, and can’t prioritize lean payments due to health reasons? These are the questions that keep lenders up at night, so the solution is to simply reject loan requests.
Lack of Cash Flow
Traditional lenders want to see proof of someone drawing a regular salary from a corporation as reassurance against funds. Most independent property investors in New York don’t operate that way. CRE investors generate revenue with house sales, or from rent – which is always an uneven amount. Lenders point to lack of “official” cash flow as grounds for rejecting loan applications almost immediately.
There is a Better Way
Express Capital Financing offers solutions designed specifically for commercial real estate investors in New York. Whether it’s your first rental conversion or your hundredth construction project, our team will offer accessible options tailored to your needs. Contact our team today to learn more.