Commercial Property Loans in Los Angeles, California

Economy in Review

Los Angeles is a major economic hub in California and the United States. The city has a diverse economy with major industries including entertainment, technology, healthcare, and tourism. According to the Bureau of Labor Statistics, the unemployment rate in Los Angeles has been steadily decreasing over the past few years and is currently below the national average.

The city's population has also been growing, which has led to an increase in demand for commercial real estate. This growth has been driven by both domestic and international migration to the city. As a result, Los Angeles has become a highly competitive market for commercial property loans.

Multifamily Market

The multifamily market in Los Angeles has been strong in recent years. According to the U.S. Census Bureau, the city's population has been growing faster than its housing supply, leading to a shortage of affordable housing. This has resulted in high demand for multifamily properties, particularly those that are affordable.

Investors looking to finance multifamily properties in Los Angeles can expect competitive interest rates and terms. Lenders are generally willing to finance properties that are well-located and have strong cash flow potential.

Office Market

The office market in Los Angeles is also highly competitive. The city is home to many large corporations and startups, which has led to high demand for office space. However, there has also been an increase in remote work due to the COVID-19 pandemic, which has led to some uncertainty in the market.

Despite this uncertainty, lenders are still willing to finance office properties in Los Angeles. Investors should be prepared to provide detailed financial information and demonstrate strong cash flow potential.

Industrial Market

The industrial market in Los Angeles has been strong in recent years. The city is a major transportation hub, with access to major ports and airports. This has led to high demand for industrial properties, particularly those that are well-located and have strong transportation infrastructure.

Lenders are generally willing to finance industrial properties in Los Angeles, particularly those that have strong cash flow potential and are well-located.

Retail Market

The retail market in Los Angeles has been impacted by the COVID-19 pandemic. Many retailers have been forced to close due to government restrictions and decreased consumer demand. However, there are still opportunities for investors looking to finance retail properties in the city.

Lenders are generally willing to finance retail properties that are well-located and have strong cash flow potential. Investors should be prepared to provide detailed financial information and demonstrate a strong business plan.

Self-Storage Market

The self-storage market in Los Angeles has been growing in recent years. The city's population growth has led to an increase in demand for storage space. Additionally, many businesses are using self-storage facilities for inventory and equipment storage.

Lenders are generally willing to finance self-storage properties in Los Angeles, particularly those that are well-located and have strong cash flow potential.

Hospitality Market

The hospitality market in Los Angeles has been impacted by the COVID-19 pandemic. Many hotels have been forced to close or operate at reduced capacity due to government restrictions and decreased travel demand. However, there are still opportunities for investors looking to finance hospitality properties in the city.

Lenders are generally willing to finance hospitality properties that are well-located and have strong cash flow potential. Investors should be prepared to provide detailed financial information and demonstrate a strong business plan.

Commercial Real Estate Loans by Purpose

There are many types of loans available for commercial properties in Los Angeles, and the best fit for you depends on your investment strategy. Here are some broad categories of financing available.

Permanent Financing

Permanent financing is a type of loan that remains in place for an extended period of time. It's commonly used to finance the acquisition of commercial properties or to refinance existing debt. Types of permanent financing include bank loans, loans from government-sponsored entities like Fannie Mae and Freddie Mac, HUD loans, credit union loans, loans from life insurance companies, commercial mortgage backed securities (CMBS) loans, and other types of loans depending on the specifics of the commercial property.

Refinancing a Commercial Real Estate Property in Los Angeles

I wouldn't quite call this a separate type of loan, but I have to mention refinancing in here. These are typically permanent loans (but not always) used to pay down an existing, partially amortizing or interest-only loan.

Often you may be able to time a refinance to happen after an interest rate drop — an ideal solution — but if your loan is maturing during a period of higher rates, you shouldn't stress too much about this. We'll work with you to find the best loan terms for your commercial property by reaching out to potentially thousands of lenders. Just complete the form below, and we'll get to it.

Construction Financing

Construction financing, also known as interim financing, is used to finance the cost of construction for commercial properties. It is usually a short-term loan that covers the cost of land development and building construction. Once construction is completed, the borrower can typically convert this into a permanent loan or pay it off with a new loan.

Bridge Loans

Bridge loans are a type of short-term loan that can be used to cover costs in the interim period between the end of one loan and the beginning of another. They are typically used in commercial real estate to finance the transition between construction financing and permanent financing. Bridge loans generally have higher costs than most other financing options and are often interest-only and non-recourse.

Commercial Real Estate Loans by Type

Depending on the purpose of your loan, you will have several financing options available to meet your investment goals. Read below to learn more about specific loan types.

Bank Loans

Bank loans are a common financing option for commercial real estate in Los Angeles. They can offer competitive interest rates and flexible terms, but the specifics can vary greatly from bank to bank. While they may not always be the best fit for larger, more complex projects, they can be an excellent option for smaller, simpler properties.

Life Company Loans

Life company loans are typically used to finance high-quality assets in major markets. They generally have lower loan-to-value ratios than most other loan types but offer competitive interest rates and long terms. However, they may not be suitable for riskier projects or properties in less established markets.

Agency Loans

Agency loans, offered by government-sponsored entities like Fannie Mae and Freddie Mac, are typically used for properties that are mostly multifamily. They offer attractive loan terms, low, fixed interest rates, and are non-recourse. However, there are restrictions on the amount of income that can come from other commercial uses.

HUD Loans

HUD multifamily loans are government-backed loans that are primarily used for the construction, substantial rehabilitation, purchase, and refinancing of multifamily properties. These loans offer long-term, non-recourse financing with competitive interest rates but have extensive requirements for qualification.

CMBS Loans

Commercial Mortgage Backed Securities (CMBS) loans are a type of mortgage-backed security backed by commercial real estate loans. Lenders focus more on the strength of the property than the borrower's credit, making them a good option for properties with strong cash flow.

SBA Loans

Small Business Administration (SBA) loans, such as the SBA 7(a) and SBA 504, offer attractive financing options for small businesses. However, the maximum amount for an SBA 7(a) loan is $5 million, while SBA 504 loans can go up to $20 million. They cannot be used for multifamily properties and are only available for properties that the business owner occupies.

Mezzanine Loans

Mezzanine financing is a hybrid form of financing that combines elements of debt financing and equity investment. It is typically used in commercial real estate to fill a funding gap between the primary loan and the total cost of a project.

Commercial Property Insurance in Los Angeles

This part isn't about loans, but it's just as important to your investment's success. Let's talk (quickly) about insurance.

Insurance premiums have skyrocketed in the past few years, as I'm sure you know. While multifamily gets a lot of the attention, rates for insuring anything from office buildings to shopping centers have jumped significantly.

Janover Insurance Group is dedicated to finding the best insurance solutions for your commercial real estate assets in Los Angeles. Click to get a free insurance quote for your property — no obligation.