Businesses need to take out mortgages for major purchases, similar to those taken out by individuals looking to finance a home purchase. A business mortgage is similar to a home mortgage in many ways, but has certain unique characteristics. If your business is seeking to obtain a mortgage for a warehouse purchase, use this article as a guide in regards to how to begin the process.

To begin to take out a mortgage, you should take stock of your company’s finances. Begin by obtaining copies of any financial statements available for the past few years. Typically speaking, having three years of financial statements is sufficient for an established business to obtain a mortgage. Three years of financial statements generally provide a trend of operations that are useful for lenders to see how your operations have fluctuated in the past few periods. Consider if these statements are compiled, reviewed, or audited by a certified public accounting (CPA) firm. Audited statements provide the best assurance to a commercial mortgage lender, as the numbers have a higher probability to be accurate and the lender has as party with financial resources whom they can sue if the figures are significantly misstated.

It is also helpful to contact commercial mortgage brokers in order to determine what additional qualifications may be needed for a mortgage loan to purchase a property. Commercial mortgage brokers will also walk you through the paperwork and application process and are helpful in assisting you in applying for a loan.

If you have already located a warehouse that you want to purchase, and have negotiated a price, it is best to provide a commercial mortgage lender the information regarding the property that you have available, including the name of the seller, the sale price of the property, any liens that the property or company has on it, the tax lot number of the property and any back taxes or tax liens on the property, and the annual property taxes on the property.

Information should also be readily available including copies of any other loans (real or others including lines of credit, capital leases, etc.) that your firm has outstanding. In addition, you should have a firm understanding of your company’s cash flow and ability to repay the loan and meet the monthly payments through your company’s finances with these payments. Being aware of the cash that you will use for a down payment is also helpful as well as the amount that your company is intending to put down on the building. A plan should be developed for getting the warehouse ready for business, detailing out expected capital improvements and when you expect to move into the warehouse, as well as how it will alter your business operations for this period.

In addition, it may be worthwhile to run a cost allocation study on a warehouse that you purchase. Basically, a cost allocation study may allow your firm to allocate portions of the building that you acquire to leasehold improvements that may allow an accelerated life associated with the tax depreciation on this property. This can lead to a reduction in income taxes on your property acquisition. Contact your accountant to obtain additional information regarding this service. It is a good idea to bring an accountant into the acquisition process, as they may be able to structure the purchase in a tax beneficial way easier if you involve them in the process early.

Commercial mortgages for warehouse purchases require a significant amount of paperwork and typically involves due diligence by the lenders of commercial mortgages. Being organized and forthright with your mortgage lender should accelerate the process and lead to an increased likelihood of your firm obtaining a loan.

Andrew Black is the resident writer for commercial Mortgage broker sites including Charleston Financial – visit the site for your commercial mortgage advice and needs – http://www.charlestonfinancial.co.uk

Andrew Black is the resident writer for Mortgage broker sites including Charleston Financial – visit the site for your commercial mortgage advice and needs – http://www.charlestonfinancial.co.uk

Author Bio: Andrew Black is the resident writer for commercial Mortgage broker sites including Charleston Financial – visit the site for your commercial mortgage advice and needs – http://www.charlestonfinancial.co.uk

Category: Finances
Keywords: commercial mortgages, bridging loans, mortgage broker