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Are you looking for a new place to house your business or considering purchasing the building your office currently occupies?

Owning your commercial real estate (CRE) can provide stability, long-term financial benefits, and greater control over your workspace.

Whether you're seeking to grow your business, customize your environment, or invest in a property that will build equity over time, understanding the ins and outs of owner-occupied commercial real estate loans is key. Let Crews Bank & Trust guide you through the process, helping you find the perfect financing solution to support your organization’s Florida CRE ownership needs.

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What Classifies as Owner-Occupied CRE?

For a property to be classified as owner-occupied, the business that owns the property must occupy at least 51% or more of the usable space. This means that the majority of the property is used to operate the business itself rather than being leased out to other tenants. The classification is important because it determines eligibility for owner-occupied commercial real estate loans, which typically offer better terms compared to investment property loans.

Common examples of owner-occupied real estate include:

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Office buildings for law firms, accounting firms, and other professional services looking to control their work environment.

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Retail spaces such as restaurants and boutique stores, where ownership allows for tailored customer experiences.

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Medical offices so healthcare providers can customize their space.

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Industrial warehouses for manufacturing, logistics, and wholesale companies that need specialized facilities.

The Benefits of Owner-Occupied CRE Property

Owning your commercial property comes with several distinct advantages that can positively impact your business’s financial stability and growth.

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Build Equity

One of the primary draws of owning your commercial real estate is the ability to build equity over time. Unlike renting, you reduce your loan balance and increase your ownership stake in the property with each mortgage payment.
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Rent Vacant Space

If your business doesn't need the entire property, you can rent out vacant space to other tenants (while maintaining your 51% occupation) as an additional revenue stream to help offset your mortgage payments and contribute to your financial stability.
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Customization

Owning your commercial property gives you complete control over customization. You have the freedom to modify, expand, or renovate the space to meet your company's specific needs without worrying about landlord restrictions.
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Lower Taxes

Ownership may also provide lower taxes through various tax deductions and benefits. You can typically deduct mortgage interest, property taxes, and depreciation, which can reduce your taxable income.

The Disadvantages of Owner-Occupied CRE Property

While there are many pros, consider the potential challenges and drawbacks that come with property ownership before deciding to make the investment.

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Depreciation

Buildings and facilities can wear down or become outdated, decreasing their value unless regular improvements and updates are made. Depreciation can also limit the property’s resale value in the future.
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Maintenance Costs

As the property owner, you are responsible for maintenance costs versus a separate landlord. Costs of routine upkeep and unexpected plumbing, electrical, or structural problems can add up over time, especially for older properties.
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Tenant Management

If you choose to rent out part of your property to other businesses, you will need to handle tenant management. Tenant turnover, late payments, and property damage can become time-consuming and may require additional resources if you don’t outsource.
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High Down Payment

One of the more significant barriers to owning commercial real estate is the high down payment typically required. Lenders usually ask for 10% to 25% of the property’s value upfront, which can be a considerable financial burden, especially for small businesses.

Understanding Interest Rates

The interest rate you receive will directly impact your monthly payments and the overall cost of your loan. There are several key factors to consider when evaluating your loan options, including whether you opt for a fixed or adjustable rate.

Rate Factors

Interest rates on commercial real estate loans are influenced by several factors, including:

  • Credit Score: Borrowers with higher credit scores typically qualify for lower interest rates, as they represent a lower lending risk.
  • Loan Term: The length of the loan can affect the interest rate. Shorter loan terms often come with lower rates, but higher monthly payments.
  • Market Conditions: Economic factors such as inflation, federal reserve rates, and overall market conditions play a significant role in determining interest rates at any given time.
  • Loan-to-Value Ratio (LTV): A lower LTV (meaning you borrow less compared to the property’s value) can result in a better rate, as it reduces risk for the lender.
  • Property Type and Location: Different property types or locations may be viewed as higher or lower risk, which can affect the rate offered by the lender.

Adjustable Rate loans Vs. Fixed Rate loans

Adjustable Rate Loans

With an adjustable rate loan (also known as a variable rate loan), the interest rate may fluctuate over time based on market conditions. Typically, adjustable rates start lower than fixed rates, which can make them appealing in the short term. However, after an initial fixed period, the rate can adjust periodically, potentially leading to higher payments in the future. This option is best suited for borrowers who expect market rates to remain stable or plan to refinance before the rate adjusts.

To see how an adjustable rate could affect your payments, use our Adjustable Mortgage Calculator to calculate different scenarios based on potential rate changes.

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Fixed Rate Loans

A fixed rate loan provides stability with consistent monthly payments throughout the life of the loan. With this option, your interest rate is locked in at the start and remains unchanged, regardless of fluctuations in market interest rates. Predictability makes fixed rate loans an attractive option for borrowers looking to budget with certainty over the long term.

To explore how different fixed rates might impact your loan, you can use our Mortgage Loan Calculator to estimate monthly payments based on the loan amount, term, and interest rate.

Crews’ Owner-Occupied Loan Options

With decades of experience in commercial real estate financing in Florida, Crews Bank & Trust is the right choice for securing owner-occupied loans. Our team offers flexible loan options and personalized support to meet the unique needs of your business.

CRE Financing

There are a variety of loan options at Crews to help businesses invest in FL owner-occupied commercial real estate. For those looking to finance mixed use properties—where the business occupies at least 51% of the space while leasing the rest—our loans provide flexibility and competitive terms to meet your needs. We also provide both SBA 504 and SBA 7(a) loans, which are ideal for small businesses seeking long-term, low-interest financing with lower equity requirements.

Your business can choose between fixed rate and adjustable rate loans based on your unique needs. Whatever your business strategy, Crews Bank & Trust can help you find the best financing solution.

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Refinancing Program

Our Buy Now, Refi Later refinancing program allows businesses to take advantage of current opportunities by purchasing owner-occupied commercial real estate now, with the flexibility to refinance later for just $500. The program is ideal for Florida business owners looking to secure a property quickly, but who may want to revisit their loan terms as market conditions change or as their financial situation improves.

How to Get an Owner-Occupied Loan

Securing the right owner-occupied commercial real estate loan is a significant step for your business. That’s why our team of experienced lending experts is here to guide you through every stage of the process, from initial consultation to loan approval and beyond. We’ll work closely with you to assess your needs, explain your options, and customize a financing solution that aligns with your business goals. Our dedicated team is committed to making the process smooth, transparent, and tailored to your success, whether you're a first-time borrower or looking to refinance.

Application Process

Let’s walk through the application process to see how we can help you achieve your commercial real estate goals:

1. Before meeting with a lender, it may be helpful to gather: 

- 2 or 3 years of personal & business tax returns, including all K-1s (Any borrower with 20% or more ownership in the proposed ownership will be required to provide this information.)

- Personal financial statement, fully completed and signed (A personal financial statement is needed for any person that is a party to the transaction.)

It may also be beneficial to have the following information, if it applies to your transaction:

- Year-to-date balance sheet and income statement for associated entities

- Verification of liquidity to acknowledge where the down payment is coming from

- Contract on sale and purchase of subject property

- If the property currently has or has had tenants, a historical financial statement on the subject property

- Copies of all leases for income-producing property purchases

2. Get in touch to discuss your needs.

Loans subject to credit approval.

This information is not a substitute for legal or tax advice.

Crews Bank & Trust and its representatives are unable to provide legal or tax advice.

Please consult an appropriate advisor regarding any legal or tax consequences.

Common Mistakes to Avoid

Here are some common mistakes to avoid that cause setbacks in your loan experience:

  1. Not Understanding Loan Terms: It’s crucial to thoroughly understand the loan terms, including interest rates, repayment schedules, and any prepayment penalties. Failing to do so could lead to unexpected costs and financial strain later on.
  2. Overestimating Income: Borrowers sometimes overestimate their future income or business growth potential when taking out a loan. Be realistic about your cash flow to ensure you can comfortably make your loan payments.
  3. Ignoring Maintenance Costs: Many business owners focus solely on the purchase price and forget to account for ongoing maintenance costs. Owning a property comes with regular expenses like repairs, utilities, and upkeep, which should be factored into your financial planning.
  4. Inadequate Down Payment Preparation: Owner-occupied loans often require a significant down payment—typically 10 to 25% of the property’s value. Not preparing for this upfront cost can lead to delays or difficulties in securing the loan.
  5. Failing to Review Personal and Business Credit: Lenders will review both your personal and business credit scores when considering your loan application. Make sure to check and improve your credit standing before applying to secure better terms.
  6. Choosing the Wrong Loan Type: Selecting the wrong loan type, such as opting for a variable-rate loan when a fixed rate loan might be safer for your situation, can lead to financial instability. Consult with our lending experts to determine which loan option best fits your business’s needs.
  7. Not Accounting for Future Business Needs: While focusing on current needs is important, overlooking future growth can be a mistake. Consider whether the property will accommodate your business’s growth or changing needs in the coming years.

Owner-Occupied CRE Loan FAQs

How can I improve my chances of getting approved for an owner-occupied loan?

How long does it take to get approved for an owner-occupied loan?

How much down payment is required for an owner-occupied loan?

How does the condition of the property affect my loan application?

Can I use an owner-occupied commercial real estate loan for renovations or improvements?

Can I use an owner-occupied loan to purchase a mixed use property?

Are there prepayment penalties for owner-occupied commercial real estate loans?

Ready to Own Your Florida Commercial Property? Get Started with a Loan Today!

Take the next step toward securing your business’s future by investing in your own commercial property. Whether you’re ready to apply or just exploring your options, our team is committed to helping you find the best financing solution tailored to your business needs. Reach out to us today and let’s turn your commercial real estate goals into reality.

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