How to Get Equity Out of Commercial Property Fast

Windsor Paradise Realty > How to Get Equity Out of Commercial Property Fast
How to Get Equity Out of Commercial Property Fast
3 May
Arjun Mehta May 3 2025 0

So you own a commercial property and want to pull some cash out of it. Maybe upgrade, expand your business, or just get a chunk of money in your account. You’ve heard you can “tap the equity,” but what does that actually mean in practice?

Equity is just the part of the property's value you fully own—that’s the market value minus whatever you still owe the bank. If your building’s worth $2 million and your loan balance is $1 million, you’ve got $1 million in equity sitting there. But you can’t exactly break a wall and pull out dollars. You need a strategy to turn that equity into real cash or usable capital.

What Does Getting Equity Out Mean?

When people talk about getting equity out of a commercial property, they’re basically talking about turning part of the property's value into cash or something they can actually use. Let's keep it simple: equity is the difference between what your property is worth today and what you still owe on your mortgage. That chunk is yours to keep, but it’s tied up until you unlock it—almost like money sitting in a safe that needs the right combination.

Why do owners want this? Extra cash can be used for pretty much anything—buying another property, updating the building, or covering business expenses. Here’s the basic math:

  • Your property’s current appraised value
  • Minus your remaining mortgage or loans
  • Equals your equity

So, for example, if the bank says your building is worth $1.5 million and you still owe $700,000, your equity is $800,000. That’s the amount you might be able to pull out with the right deal. Keep in mind, most banks won’t let you take 100%—they usually want you to keep some skin in the game (meaning, some equity locked in the property as a buffer).

How much can you really get? Most lenders let you take out up to 70% to 80% of the property’s value (Loan-to-Value, or LTV). Check out this table for how it looks:

Property ValueMax LTV (%)Loan LimitIf You OwePotential Cash Out
$2,000,00075%$1,500,000$1,000,000$500,000
$1,500,00070%$1,050,000$700,000$350,000

Getting equity out isn’t just about cashing in and walking away. You can use this money to reinvest, fix up the property, or give your business a shot in the arm. It’s about using your property to work for you—not just sitting there gathering dust (and taxes).

Cash-Out Refinancing Explained

Cash-out refinancing is probably the most popular way to get your hands on the equity sitting in your commercial property. Here’s how it works in plain language: you get a new, bigger loan to replace your old mortgage, and you pocket the difference in cash. That cash comes straight from your equity.

Let’s say you owe $600,000 on your property, and the latest appraisal says your place is worth $1.2 million. You could refinance for say, $900,000. You use $600,000 to pay off the old loan and the other $300,000 goes right into your pocket. Of course, you’ll pay closing costs and fees out of that chunk, so keep that in mind.

Lenders usually let you cash out up to 70-75% of your property’s value, but it varies. They care about your cash flow and the property’s income. If your property is fully leased to good tenants, you’ll get better terms. Banks look at your income, credit history, and property type before approving a cash-out refinance.

Key Numbers for Cash-Out RefinancingTypical Range
Max Loan-to-Value (LTV)70-75%
Closing Costs2% to 5% of the loan
Approval Time30-60 days

Here’s how you do it, step-by-step:

  1. Contact a lender who handles commercial property loans.
  2. Get a recent property appraisal.
  3. Share your business financials and rent roll.
  4. The lender crunches numbers to figure out how much cash you can get.
  5. If you like the offer, complete the paperwork and pay closing costs.
  6. After closing, the lender wires the cash difference to your account.

People often use cash-out refinancing for property upgrades, buying new real estate, or paying off high-interest business debt. But don’t forget—your new loan payments could be bigger unless you grab a lower interest rate. Always run the numbers before you sign anything.

Other Ways to Access Your Equity

Other Ways to Access Your Equity

Refinancing gets talked about a lot, but it's not the only way to access the equity built up in your commercial property. There are a few options out there, each with pros and cons depending on your goals, loan terms, and risk tolerance. Let’s break down what real owners are doing right now.

  • HELOCs (Home Equity Lines of Credit) on Commercial Property: Some banks offer business lines of credit secured against your building. These are way more common for homes, but they exist for commercial assets too. A commercial HELOC lets you tap into your equity as needed, instead of taking a giant loan all at once. The rate is often variable, and you usually only pay interest on the amount you draw.
  • Second Mortgages: If your first mortgage still has good terms or a low balance, you might consider a second mortgage. This is basically stacking another loan on top of the first. Lenders will check that you have enough remaining equity. Interest rates on second mortgages are usually higher than your primary loan, but they can work when refinance isn’t ideal.
  • Partial Sale or Equity Partner: Some owners bring in a partner who buys a share of the building. You get a cash payout, and they get a slice of ownership and future profits. Think of this like selling stock in your property. This approach is common with larger assets or investment groups.
  • Sale-Leaseback Agreements: If you want the biggest cash-out and are okay giving up ownership, you can actually sell the building to an investor and then lease it right back. You free up most (or all) of your equity while staying in your location as a tenant. This move is popular among businesses who want to stay put but need a serious capital injection.

Wondering how common these options are? Here’s a recent industry breakdown:

Method% of Usage (2024)
Refinance48%
Sale-Leaseback24%
Equity Partner/Partial Sale16%
Second Mortgage/Line of Credit12%

Pick the option that fits your situation. If you want to hang onto control, second mortgages or lines of credit may make more sense. If you’re ready to cash out big and don’t mind losing some or all ownership, partnering up or doing a sale-leaseback might be better.

No matter what you choose, shop around. Terms, fees, and flexibility can be wildly different from one lender or buyer to another. Don’t just settle for the first offer you get.

Tips to Maximize Your Property’s Value

Getting the most out of your commercial property isn’t complicated, but a lot of owners leave easy money on the table. It comes down to knowing which improvements and steps put actual dollars in your pocket when you need to access equity or attract buyers.

  • Keep Your Property Maintained. Simple stuff like a fresh coat of paint, updated signage, or neat landscaping signals to lenders and appraisers that your building is worth more. If the roof looks like it’s about to cave in, don’t expect a high valuation.
  • Upgrade What Counts. Tenants care about usable upgrades—think energy-efficient lighting, HVAC systems, or Wi-Fi that actually works everywhere. These improvements not only boost value but can also help you increase rents.
  • Fill Your Vacant Spaces. A property that’s fully leased is way more attractive to buyers and lenders. Try offering short-term deals or incentives to get those empty units filled before an appraisal.
  • Show Strong Financials. Keep your rent rolls, expense statements, and lease agreements organized and ready. An appraiser or bank moves faster (and gives you more options) when they see clean documents and reliable income.

Want proof that this works? A 2023 CBRE survey reported that commercial properties with full occupancy averaged sales prices nearly 12% higher than those with even a single vacancy. And energy-efficient upgrades aren’t just for bragging—properties with green certifications leased up to 20% faster than those without.

Improvement Potential Value Bump (%)
Full Occupancy +10–15%
Modern HVAC & Lighting +5–8%
Energy Efficiency Certs +3–5%
Fresh Paint & Exterior +2–4%

If you’re planning a commercial property sale or looking to refinance, even small tweaks can pay off big. Walk through your building like a picky buyer or lender, and fix what jumps out—you’ll be surprised by the offers or loan terms that start coming your way.

Tags:

Arjun Mehta

I work in the real estate industry, specializing in property sales and rentals across India. I am passionate about writing informative and engaging articles on the various aspects of the Indian property market. My goal is to help buyers, sellers, and renters make well-informed decisions. In my free time, I enjoy exploring new trends in real estate and translating them into easy-to-read content. I strive to offer insights that can demystify the complexities of real estate dealings for my readers.

Write a comment

Your email address will not be published. Required fields are marked *

Color Option