What Is the Best Kept Secret of Commercial Real Estate?

I’ve said for many many years the best kept secret of commercial real estate financing is the SBA 504 loan and the reason for that is the third reason why people would use an SBA 504 loan is the below market long term fixed interest rate on that SBA guaranteed second lien loan. Ok you have 2 loans under a SBA 504 structure you have generally 50 percent of the total project first lien loan and then you have a second lien loan often times it’s 40 percent of the project depending if it’s a special purpose property or start up it could be as low as 30 percent of the total project but that second subordinate mortgage or deed of trust is what I often call the best kept secret of commercial real estate financing because it is such a long term fixed interest rate it’s a 20 year fixed interest rate it’s often below market pricing and it’s very very beneficial for a business seeking out commercial real estate financing when they’re gonna be an owner user.

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