Real estate loans are not mortgages. This will surprise many people, but that piece of info is the best way to open an article. Now when you realize that you know very little about real estate loans allow me to educate you. This article will contain just a sneak peak worth of information about real estate loans that can be found on Rayaz Home Loan Consulting. Mortgages are more than often given to the individuals, which is not the case with real estate loans. Real estate loans are given to the parties which are in renting business. Entity that applies for real estate loan may lack any credit history, which is the reason for the requirement of guarantors, who are part of the entity in question.
There is also a non-recourse loan which doesn’t have guarantee requirement, but in that case the property is a security and it is taken if the loan is not repaid as it should be.
Repayment schedule of real estate loans is different from schedule of mortgage loans. In the case of mortgage loans they have 30-year repayment period (this is most common repayment period, but you can choose 20 or 15 years period as well) and the loan is repaid in small monthly installments over that course of time. In the case of commercial (real estate) loans the amortization period is always longer than the term of the loan.
For example you can get a real estate loan with term of 10 years and amortization period of 25 years. In this case you would pay monthly installments for the period of those 10 years (the size of those installments would be as if you would repay it for 25 years). At the end of that 10 year period you would pay a balloon payment, a lump sum which would cover the rest of the loan.
You will not be able to prepay the loan (to repay it before the time it is written in the contract) without some penalties. Most of the real estate loans do have those penalties and there are four types of them:
– Basic penalty is cash penalty with which you will repay the loan before its maturity date, but you will have to pay penalty fees that are stated in the contract as well.
– Then you have interest guarantee. The lender of the loan must receive all interest on the loan and prepayment will not neutralize that interest.
– Lockout is a penalty that locks the loan repayment and in that case the borrower can’t fully repay the loan until the end of that lockout.
– Defeasance is similar to cash penalty, but in this case new collateral is exchanged for the collateral from the original contract. If you see the defeasance penalty in your contract be careful because it can have high cost/value ratio.
New York was and it still is prime location for an apartment or a house. Renting one or buying one is not so smart, but buying an apartment with real estate loan and then renting it is a good and smart business decision. Manhattan is a perfect location for this kind of business, and apartments that are overlooking Central Park can fetch nice monthly rent which will pay off installments. Central Park South property for sale is recommended by many real estate agencies as a prime investment option. This location features many different condos, and Rayaz Home Loan consulting also recommends this area as a good place to invest your money in. If you do go this route, it is of utmost importance that you work with a respected and proven Realtor that you trust because without this resource, it will be very difficult finding the right fit for your needs.
Prices are good, there is high diversity in apartments, and the fact that it happens to be where it is, at the edge of Central Park, its rent will be able to cover monthly installments and there will be some leftover which will go to your pocket.
If you are looking for big places to get with your real estate loan and rent them to a bit richer people you will find several good places. 1 Central Park South number 301 is an address of 2 500 square feet cream and black Deco apartment which has 3 bedrooms and 4.5 baths. This place is an epicenter of glamour and elegance which is shown through big proportions of all rooms, ceilings that are 13 feet high and interior design which includes art collection including Picasso, Calder and few other famous painters. If you want to buy this place you will need around 30 million dollars which translates in around 150 000 dollars in the installments.
But Central Park South is not a place filled with high-end expensive apartments. There are those there, but there are more middle range and low range property there are well.
In a same street with under number 510 you have 1 200 feet apartment which features 11 feet ceilings, 2 bedrooms and 2 bathrooms which costs only a bit over 5 million dollars. Monthly installments for this kind of apartment will be around 28 000 dollars. This is a middle range apartment and a lot of space is reserved for garden and a private terrace where you can enjoy your free time.
For around 2 million dollars you will be able to buy and get a rent from 900 feet apartment in the same street on number 133. This place has 1 bedroom and 1.5 bathrooms with 3 rooms in total. It overlooks Plaza courtyard and it is a place which is done in Edwardian style for income production.
You will have to pay around 20 000 in a monthly installments but you might get better contract terms if you do it over real estate loan. If you find these locations interesting feel free to browse Rayaz Estate Loan Counseling website to find more premium locations in Central Park South area.