Q: Is there a difference between residential and commercial financing?
A: Yes – There are differences with regards to rate, term, qualification, and data. A commercial loan is usually determined by the property’s projected NOI (Net Operating Income). A residential loan is usually determined by the individual’s credit and income history.
Q: Do real estate brokers draft contracts for the sale/lease for commercial buildings and land?
A: No – Legally, NJ Real Estate Brokers are only allowed to draw contracts on residential 1 to 4 family homes and single family lots. All commercial property contracts must be drawn up by a licensed attorney.
Q: What are the SBA and EDA programs?
A: SBA = Small Business Administration. The SBA is a government agency that provides support to small businesses and entrepreneurs ; EDA = Economic Development Administration. The EDA provides assistance and grants to economically distressed communities in order to stimulate economic growth.
Q: What is a 1031 Exchange?
A: Also known as a Starker, allows the seller of an investment property to defer the capital gains tax by allowing them to reinvest their money into a like-kind property. It is important for all investors to consult a qualified intermediary.
Q: Is flood insurance required on a commercial property?
A: Yes – Same as with residential properties, if your commercial property is in a flood zone, or at risk, you may be required to have flood insurance. Your insurance agent should provide you with accurate information on what your specific property needs.
Q: Can all attorneys handle a commercial property transaction?
A: Yes – Legally, all licensed attorneys are qualified to handle commercial property transactions. You may want to ask your attorney if he or she has handled a commercial transaction in the past. If they have not, you may want to ask if you can be referred to another licensed attorney who has expertise in working with commercial transactions.