Unlocking Equity: The Advantages of Cash-Out Loans for Commercial Real Estate Borrowers

For commercial real estate investors, builders, and owners, the ability to tap into the equity built up in their commercial properties is a strategic advantage that can help them maximize opportunities. Known as “cash-out” loans, Enact Partners works with qualified commercial real estate borrowers to unlock this potential goldmine of equity.

Let’s take a look at why cash-out loans are becoming increasingly popular and explore how they can serve as a valuable resource for those looking to optimize their real estate investments.

Why So Popular?

In many places around the country, owners have seen the values of their properties soar. This means commercial real estate owners in those areas find themselves with significant equity in their properties that can be used to grow their investments further. Thus, cash-out loans enable them to convert unused equity into liquid capital, providing the financial flexibility needed to explore new investment opportunities or fund expansion/improvement projects.

For example, a business owner with an already successful retail space might use a cash-out loan from Enact Partners to finance expansion or modernization of the property. Strategic use of equity can propel businesses to new heights, unlocking growth that would otherwise be constrained by limited available funds.

What Can Borrowers Do with Cash-Out Loans?

  • CONSOLIDATE LOANS—Cash-out loans can act as strategic tools for optimizing the cost of capital and enhancing overall financial efficiency by consolidating existing debts into single, more manageable loans. This not only simplifies financial management but can also lead to significant cost savings over time. With potential for reduced overall debt burden, borrowers can direct additional cash flow towards crucial business operations, property improvements, or additional investment opportunities.
  • BUY OUT PARTNERS—A cash out loan can also be used to free up capital within a business so that one (or more) partners can buy out one or more other partners. In this way, a cash-out loan allows one or more partners to take full ownership and avoid having to bring in other parties.
  • ENHANCE PROPERTY VALUE—Commercial properties require regular maintenance and occasional renovations. Cash-out loans allow borrowers to invest in property improvements, increasing the overall value of their assets. Examples include upgrading facilities, modernizing infrastructure, or implementing energy-efficient technologies—all of which can attract tenants and other investors, contributing to the property’s appreciation over time.
  • SEIZE TIME-SENSITIVE OPPORTUNITIES—With investments, timing is critical—especially in commercial real estate. Swift and decisive action is required. Enact Partners moves and closes on loans typically within 7 to 45 days. As a private lender, we are not regulated by the Federal Reserve, so our lending process tends to be much easier and faster than traditional banks, with less red tape involved. The ability to act promptly can make all the difference between missing out on or seizing opportunities in highly competitive markets.
  • TAX ADVANTAGES—Cash-out loans can offer tax benefits to commercial real estate borrowers. Interest payments on commercial real estate loans are often tax-deductible, providing borrowers with an opportunity to reduce their taxable income. In addition, the funds obtained through a cash-out loan usually are not considered taxable income, as they represent a loan rather than earned revenue.

Explore Cash-Out Options with Enact Partners

With our decades of experience in commercial real estate development and lending, Enact Partners recognizes cash-out loans as versatile, powerful tools for borrowers who are keen on outpacing their competitors.

Some recent examples of cash-out loans funded by Enact Partners include properties in Encinitas, CA; Montgomery, TX; and Manitou Springs, CO.

For real estate developers or investors, a cash-out loan might be just what you need to turn a business opportunity into a reality. We offer a reliable, flexible, and stable alternative to banks—and, despite recent trends in the banking industry, we continue to lend on commercial real estate projects with solid fundamentals.

Contact Us About Your Borrowing Needs

(760) 516-7776 | [email protected] | www.enactpartners.com

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