The Differences Between Average Commercial Real Estate Loan Rates

There are many different types of real estate loans and many of them come with different commercial real estate loan rates. For the year 2017, the average rates have stayed around 5 percent to 6 percent.

When it comes to choosing the right loan for you, always take into consideration the commercial real estate loan rates along with many other factors. Since each loan is quite different with different terms and requirements, these rates are going to vary depending on many things, especially the loan type. B

These types of loans are going to come with an interest rate ranging anywhere between the minimum of 3.5 percent to an outstanding maximum of 30 percent. Loans that are backed by the government like loans from the Small Business Administration and the United States Department of Agricultural along with conventional loans from banks are going to come with the most competitive interest rates. Loans that are acquired from traditional banks have seen an average interest rate of 3.5 percent to 8 percent, which isn’t too bad for 2017. But a SBA 504 loan has seen an average interest rate of around 4 percent. A SBA 7(a) loan doesn’t have quite as an impressive percentage, with an average interest rate ranging from 6.5 percent to 9 percent, higher than loans from banks, but the same average interest rate for USDA Business and Industry loans.

The entire application process requires a lot of time and documentation to complete. Commercial real estate loans rates are going to vary depending on many factors, including what is on your application. Be prepared to pay higher interest rates if your application isn’t perfect. Things like collateral, cash flow and credit history are all going to be taken into consideration along with what is provided on your application.

The benefits of purchasing commercial investment property includes lower commercial real estate loan rates

Of course, interest rates are going to depend on the type of building and property that you are investing in, but interest rates have been seen as low as 2.5 percent. When it comes to apartment complexes, the average interest rate currently ranges between 3 percent to 8.5 percent. The average interest rate for retail building are around the same, ranging between 3 percent to a higher 9.9 percent. Hotels, motels and golf courses are currently seeing the highest average interest rates that range anywhere between 3.5 percent to a staggering 14.5 percent.

But be prepared in paying higher commercial real estate loan rates when buying investment properties for construction projects

Investing in property for a construction project is much riskier because there are a lot of things that could go wrong, so there is going to be higher commercial real estate loan rates. The 2017 average interest rate for apartment complexes and office building are about the same, ranging between 4.5 percent to 10.5 percent. Restaurants happen to currently lead with the highest average interest rate for 2017 ranging from 5.4 percent to 12.1 percent

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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