Financing for real estate and property
Property managers, developers and landlords finance buildings, improvements and the operations behind them.
Key points
- Property businesses finance buildings, improvements and the timing gaps between rent and expenses.
- Lenders focus on the property’s income and the strength of its leases.
- Debt service coverage is the number lenders watch most closely.
- Because it’s secured by property, licensing rules may apply to who arranges it.
How financing works in real estate and property
Property managers, landlords and small developers finance buildings, capital improvements and the operations behind them. The property itself usually secures the financing, and the rent it produces repays it.
Financing needs range from buying or refinancing a building, to funding a roof or HVAC replacement, to covering the gap between paying expenses and collecting rent.
Common financing needs
Here’s how businesses in this industry typically match their needs to the right kind of financing.
| What you need | Usually the best fit | Why |
|---|---|---|
| Buy or refinance a building | Commercial real estate | Long-term financing secured by the property and its rents |
| Capital improvements | Term loans | Roofs, HVAC and renovations that raise value and rents |
| Timing between rents and expenses | Lines of credit | A buffer for property tax, insurance and repairs |
| Buy a property management business | Business acquisition | Grow by acquiring contracts and portfolios |
How NorthMerit can help
Apply once and we’ll connect you with one financing partner who works with businesses like yours. It’s free, and there’s no obligation.
What lenders look at
Lenders look at the property’s net operating income, occupancy, lease terms and the debt service coverage ratio. They’ll also look at your experience managing similar properties.
Longer leases with strong tenants make lenders more comfortable, and can improve both the amount and the rate.
Other things partners commonly ask about: acquisitions and refinancing; capital improvements; timing between rents and expenses.
Refinancing to fund improvements
A landlord refinances a $2,000,000 mixed-use building at 65% to fund a new roof and upgrades that raise rents.
How to prepare
Prepare the rent roll, leases, operating statements for the property, the latest appraisal or assessment and details of any planned improvements.
Common questions
Is NorthMerit a lender?
Does it cost anything to apply?
Who will contact me?
Other industries
The right financing, from the right partner.
Apply once. One financing partner who knows businesses like yours. Free, with no obligation.
