Understanding a HELOC and How To Use It: A Guide For Shenandoah Valley Homeowners

Your home is an investment in many ways, and once you accrue equity in your home, you have it at your disposal for financial uses. If you’ve been wondering why apply for a HELOC, we’ll walk you through what a HELOC is, all the things you can use it for, and how to make the most out of your HELOC. Whether you’ve built home equity from paying down your mortgage and/or the appreciating value of your house within the market, you can benefit from your ownership of the home to finance projects and consolidate debt.

What is a HELOC?

A HELOC shares similarities with products such as credit cards, but it has its own unique benefits that make it an appealing solution for homeowners with lending needs.

A Home Equity Line of Credit (HELOC) is a revolving credit account, similar to a credit card, that provides a credit limit for a certain amount of time (the draw period). You only draw funds from the account when you need to, make payments on what you borrowed, and use the credit line again until the end of the draw period.

 

While a HELOC is similar to a credit card account, the primary difference between the two is what kind of interest rate you can get. Because HELOCs are secured by your home equity, you can get a much lower rate than you would with a credit card. So, financing home renovations and other large expenses with a HELOC is usually more affordable than using a credit card or personal loan. Depending on how much equity you have in your home, you may also be able to get a higher credit limit with your HELOC than with a credit card or personal loan.

 

The other attractive benefit of a HELOC is its flexibility. Unlike a Home Equity Loan, you don’t receive a lump sum that you have to use right away. In fact, some people use the HELOC as an emergency account. You can open it now and won’t owe anything until you first draw funds. Then you can use your HELOC as many times as you want to (up to the credit limit) through the draw period.

Using a HELOC for Home Renovation

Home Equity Lines of Credit are often used to finance projects that can improve the value of your home, such as home renovation.

Have you been dreaming of a brand new kitchen? Need to add an addition to your home to create office space or room for a new baby? A Home Equity Line of Credit is a convenient way to finance your home renovation.

Benefits

  • Lower interest rates
  • Option to make interest-only payments
  • Possible tax deduction for interest paid on HELOC if the funds are used to buy, build or substantially improve your residence. Please consult your tax advisor regarding your particular situation.
  • Potential ROI when you sell your home from renovations financed through your HELOC
  • Variety of uses such as updating your home to meet your needs, improve energy efficiency, and more.
  • Great option for when you’re looking to sell your home but want to increase its value first

Using a HELOC For Debt Consolidation

If you are looking to consolidate debt from multiple sources, a HELOC could be a great option to centralize your payments in one place.

Are you drowning in credit card debt? Do you have so many different monthly debt payments, it’s hard to keep track?

Debt consolidation means taking out a new loan to pay off multiple debt accounts, such as credit card balances, personal loans, student loans, and more. Consolidating your debt with a HELOC could help you save money on interest and reduce the number of monthly bills you need to keep track of. And since HELOCs are so flexible, you may still have some credit left over to use on other things, or you can pay off your HELOC balance before using it again.

Using a HELOC For a Second Home or Investment Property

Whether you’re looking to purchase a vacation home or an investment property, you can use your HELOC to come up with a down payment on your second property and/or to make improvements and repairs to a second property you already own.

Financing Education Expenses

Whether you’re a parent with a child approaching college age, or an adult homeowner looking to return to school, a HELOC can also be used to pay for tuition and associated expenses with higher education, as well as private schools. Pay as you go and make interest-only payments if you need to keep your costs down while in school.

Paying Off Medical Debt

Whether you just got hit with a high medical bill, or you know an expensive surgery or treatment is coming up, you can use your HELOC as an emergency fund or to pay off medical debt. As mentioned earlier, HELOCs offer lower rates than credit cards, so it could be a more affordable way to pay your medical bills or any other large, unexpected expense that comes up. Preserve retirement savings and use your HELOC instead.

Tips For Getting The Most Out of Your HELOC

Review the tips below to further understand the best ways you can use and manage a home equity line of credit.

While there are many advantages to having a HELOC, you can get the most of your new Home Equity Line of Credit by following these tips:

  • Make on-time payments to avoid a late fee.
  • Pay more than just the interest due if possible.
  • Know when your HELOC draw period ends.
  • Review the terms of your HELOC and be mindful of fees.
  • Understand the closing costs associated with your HELOC.
  • Best used for smaller projects and expenses.
  • Try to use your HELOC, pay off what you borrow, and then use it again instead of maxing out your credit limit.

Apply for a HELOC From F&M Bank!

Looking for a HELOC lender in the Shenandoah valley? F&M Mortgage is a true local mortgage company that has served the community since 1999. Contact us to learn more or start the process of applying for a Home Equity Line of Credit. You can also apply online whenever you like, or visit your local branch office in Staunton, Harrisonburg, Winchester, or one of our locations in Augusta, Page, Rockingham, Frederick, or Shenandoah county to speak with a loan officer about your options.

F & M Bank Corp. Announces Second Quarter Earnings and Dividend

TIMBERVILLE, VA / ACCESSWIRE / July 27, 2021 / F & M Bank Corp. (OTCQX:FMBM), parent company of Farmers & Merchants Bank today reported net income available to common shareholders of $3.2 million and diluted earnings per common share of $0.93 for the quarter ending June 30, 2021.

These earnings are driven by growth in net interest income despite margin compression, growth in non-interest income due to our subsidiary organizations and improved asset quality and economic conditions.

Net interest income reflects year over year growth. As yields on earning assets continue to decline the Company has been able to support net interest income with savings in interest expense and growth in the investment portfolio.

Noninterest income remained strong in the second quarter at $6.4 million year to date this reflects an increase over June 30, 2020 which totaled $5.7million in the heart of the mortgage refinance boom. Growth is primarily driven by continued high volumes of mortgage originations, growth in our wealth management division, and title division.

Continued improvements in asset quality and economic conditions resulted in the ability to reduce the allowance for loan losses to 1.31% of loans held for investment (1.35% excluding PPP loans) which was accretive to income $1.975 million year to date or $1.250 million in the 2 nd quarter.

Paycheck Protection Program (“PPP”) & CARES Act

During 2021, the Company processed 363 Paycheck Protection Program (PPP) loans that totaled $23.8 million; PPP loans processed during 2020 and 2021 YTD totaled 1,080 loans for $87.1 million. In addition to an insignificant amount of PPP loan payoffs, the Company has processed a total of $64.4 million of forgiveness on 809 loans program to date resulting in a remaining balance of PPP loans of $22.7 million. As of June 30, 2021, one loan remains in a COVID related loan payment deferral status.

Selected financial highlights include:

  • Net income of $3.2 million for the quarter ended June 30, 2021 and $7.02 million year to date.
  • Net interest margin of 3.27%.
  • Total deposits increased $92.6 million and $188.7 million, respectively for the quarter and for the trailing 12 months as the bank continues to grow our composition of DDA accounts and decrease balances of Time Deposits.
  • Total loans increased $16.0 million and $36.7 million, respectively for the quarter and for the trailing 12 months (excluding PPP loans).
  • Nonperforming assets decreased to 0.50% of total assets at the end of the quarter from 0.68% on 12/31/20 and 0.57% on 6/30/20.
  • Negative Provision for Loan Losses of $1,250,000 for the quarter ended June 30, 2021, and $1,975,000 year to date.
  • Allowance for loan losses totaled 1.31% of loans held for investment (1.35% excluding PPP loans).

Mark Hanna, President, commented “ We are pleased with June 30, 2021 year to date earnings of $7.02 million. Our mortgage, title, and wealth management divisions continue to drive strong noninterest income. Loans continue to grow at a modest pace driven by Agriculture, C&I, CRE, and Dealer through a generally tepid lending environment. Our net interest margin of 3.27% reflects a historical decline but remains strong especially given the changes in our balance sheet and the current rate environment. F&M continues to gain relationships in our legacy and new markets adding to an already highly liquid balance sheet as the bank implements strategic solutions to leverage these assets.”

On July 23, 2021, our Board of Directors declared a second quarter dividend of $.26 per share to common shareholders. Based on our most recent trade price of $29.00 per share this constitutes a 3.59% yield on an annualized basis. The dividend will be paid on August 30, 2021, to shareholders of record as of August 14, 2021.”

F & M Bank Corp. is an independent, locally-owned, financial holding company, offering a full range of financial services, through its subsidiary, Farmers & Merchants Bank’s twelve banking offices in Rockingham, Shenandoah, and Augusta Counties, Virginia. The Bank also provides additional services through a loan production office located in Penn Laird, VA, a loan production office in Winchester, VA and through its subsidiaries, F&M Mortgage and VSTitle, both of which are located in Harrisonburg, VA. Additional information may be found by contacting us on the internet at www.fmbankva.com or by calling (540) 896-1705.

This press release may contain “forward-looking statements” as defined by federal securities laws, which may involve significant risks and uncertainties. These statements address issues that involve risks, uncertainties, estimates and assumptions made by management, and actual results could differ materially from the results contemplated by these forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in interest rates, general economic conditions, legislative and regulatory policies, and a variety of other matters. Other risk factors are detailed from time to time in our Securities and Exchange Commission filings. Readers should consider these risks and uncertainties in evaluating forward-looking statements and should not place undue reliance on such statements. We undertake no obligation to update these statements following the date of this press release.

F & M Bank Corp.
Key Statistics

2021 2020
Q2 Q1 YTD Q2 Q1 YTD
Net Income (000’s)
$ 3,220 $ 3,801 $ 7,021 $ 2,626 $ 1,189 $ 3,815
Net Income available to Common
$ 3,154 $ 3,736 $ 6,890 $ 2,560 $ 1,123 $ 3,683
Earnings per common share – basic
$ 0.98 $ 1.17 $ 2.15 $ 0.80 $ 0.35 $ 1.15
Earnings per common share – diluted
$ 0.93 $ 1.11 $ 2.04 $ 0.76 $ 0.35 $ 1.11
Return on Average Assets
1.22 % 1.56 % 1.39 % 1.17 % 0.58 % 1.70 %
Return on Average Equity
13.06 % 15.96 % 14.78 % 11.50 % 5.23 % 16.70 %
Dividend Payout Ratio
26.53 % 22.22 % 24.19 % 32.50 % 74.29 % 45.22 %
Net Interest Margin
3.13 % 3.44 % 3.27 % 3.55 % 3.97 % 3.75 %
Yield on Average Earning Assets
3.56 % 3.92 % 3.72 % 4.20 % 4.88 % 4.52 %
Yield on Average Interest Bearing Liabilities
0.62 % 0.70 % 0.66 % 0.92 % 1.27 % 1.09 %
Net Interest Spread
2.94 % 3.22 % 3.06 % 3.28 % 3.61 % 3.43 %
Provision for Loan Losses (000’s)
$ (1,250 ) $ (725 ) $ (1,925 ) $ 800 $ 1,500 $ 2,300
Net Charge-offs
$ (272 ) $ 45 $ (227 ) $ 203 $ 453 $ 656
Net Charge-offs as a % of Loans
-0.16 % 0.03 % -0.03 % 0.12 % 0.30 % 0.10 %
Non-Performing Loans (000’s)
$ 5,532 $ 5,783 $ 5,532 $ 4,465 $ 4,168 $ 4,465
Non-Performing Loans to Total Assets
0.50 % 0.57 % 0.50 % 0.45 % 0.50 % 0.45 %
Non-Performing Assets (000’s)
$ 5,532 $ 5,783 $ 5,532 $ 5,625 $ 5,504 $ 5,625
Non-Performing Assets to Assets
0.50 % 0.57 % 0.50 % 0.57 % 0.66 % 0.57 %
Efficiency Ratio
76.07 % 68.00 % 72.00 % 65.33 % 70.51 % 67.79 %
  1. The net interest margin is calculated by dividing tax equivalent net interest income by total average earning assets. Tax equivalent interest income is calculated by grossing up interest income for the amounts that are nontaxable (i.e. municipal securities and loan income) then subtracting interest expense. The tax rate utilized is 21%. The Company’s net interest margin is a common measure used by the financial service industry to determine how profitable earning assets are funded. Because the Company earns nontaxable interest income from municipal loans and securities, net interest income for the ratio is calculated on a tax equivalent basis as described above.
  2. The efficiency ratio is not a measurement under accounting principles generally accepted in the United States. The efficiency ratio is a common measure used by the financial service industry to determine operating efficiency. It is calculated by dividing non-interest expense by the sum of tax equivalent net interest income and non-interest income excluding gains and losses on the investments portfolio and Other Real Estate Owned. The Company calculates this ratio in order to evaluate how efficiently it utilizes its operating structure to create income. An increase in the ratio from period to period indicates the Company is losing a greater percentage of its income to expenses.

F & M Bank Corp.
Financial Highlights

INCOME STATEMENT
Unaudited
2021
Audited
2020
Interest and Dividend Income
$ 17,565,650 $ 18,101,844
Interest Expense
2,137,253 3,090,815
Net Interest Income
15,428,397 15,011,029
Non-Interest Income 6,441,307 5,681,703
Provision for Loan Losses
(1,975,000 ) 2,300,000
Impairment of long lived assets
171,109 19,193
Other Non-Interest Expenses 15,959,140 14,385,236
Income Before Income Taxes
7,714,455 3,988,303
Provision for Income Taxes
693,126 173,250
Net Income
$ 7,021,329 $ 3,815,053
Dividend on preferred stock
130,896 131,746
Net Income available to common shareholders
$ 6,890,433 $ 3,683,307
Average Common Shares Outstanding
3,205,074 3,199,183
Net Income Per Common Share
Dividends Declared
2.15.52 1.15.52
BALANCE SHEET
Unaudited
June 30, 2021
Audited
June 30, 2020
Cash and Due from Banks
$ 15,415,037 $ 16,950,810
Interest Bearing Bank Deposits
3,901,543 1,199,474
Federal Funds Sold
166,698,000 68,548,000
Loans Held for Sale
8,854,680 90,403,042
Loans Held for Investment 661,125,556 661,528,802
Less Allowance for Loan Losses
(8,726,540 ) (10,033,466 )
Net Loans Held for Investment
652,399,016 651,495,336
Securities
198,814,465 93,381,484
Other Assets
59,217,012 59,623,971
Total Assets
$ 1,105,299,753 $ 981,602,117
Deposits
$ 955,344,337 $ 766,651,982
Long Term Debt
31,309,498 100,585,081
Other Liabilities
18,434,164 22,063,159
Total Liabilities
1,005,087,999 889,300,222
Preferred Stock
4,558,298 4,591,623
Common Equity
95,653,456 87,710,272
Stockholders’ Equity
100,211,754 92,301,895
Total Liabilities and Stockholders’ Equity
$ 1,105,299,753 $ 981,602,117
Book Value Per Common Share
$ 29.80 $ 27.44
Tangible Book Value Per Common Share
$ 29.98 $ 27.51

CONTACT:
Carrie Comer EVP/Chief Financial Officer
540-896-1705 or ccomer@fmbankva.com

SOURCE: F & M Bank Corp.

View source version on accesswire.com:
https://www.accesswire.com/657238/F-M-Bank-Corp-Announces-Second-Quarter-Earnings-and-Dividend

F&M Bank Announces New Office in Winchester

TIMBERVILLE, VA., July 16, 2021 — F&M Bank Corp. (OTCQX:FMBM), holding company for F&M Bank, announced today the opening of a new commercial office in downtown Winchester. The office is located on the third floor of the historic Odd Fellows building at 45 E. Boscawen Street. Earlier in 2021, F&M Bank welcomed a local commercial team with 141 years of combined experience to spearhead the Company’s move into the northern Shenandoah Valley market. Led by Chief Strategy Officer & Northern Market Executive, Mike Wilkerson, the team consists of commercial relationship managers John Sargent and Jon Reimer; business relationship specialists Ronda Gross and Gail Pryde; and senior credit analyst Bill Steele.

“We are thrilled to grow into the vibrant City of Winchester and surrounding Frederick County,” said Mike Wilkerson. The “’Top of Virginia’ is a thriving, local economy and is contiguous to F&M’s existing Shenandoah Valley footprint. We look forward to contributing to the continued success of the region and supporting the needs of the agricultural industry, commercial and small businesses, and nonprofit organizations.

Mr. Wilkerson is available for further comment. Please contact Holly Thorne at marketing@fmbankva.com.

About F&M Bank
F&M Bank Corp. (OTCQX: FMBM) proudly remains the only publicly traded organization based in Rockingham County, VA, and since 1908, has served the Shenandoah Valley through its banking subsidiary F&M Bank, with full-service branches and a wide variety of financial services, including home loans through F&M Mortgage, and real estate settlement services and title insurance through VSTitle. Both individuals and businesses find the organization’s local decision-making, and up-to-date technology provide the kind of responsive, knowledgeable, and reliable service that only a progressive community bank can. F&M Bank has grown to $1 billion in assets with more than 175 full and part-time employees. Its conservative approach to finances and sound investments, along with excellent customer service, has made F&M Bank profitable and continues to pave the way for a bright future.

Guide to Home Renovation Loans in the Shenandoah Valley

Do you have a home renovation project on your to-do list?

Whether you are preparing your home for sale or looking to improve your existing space, renovation financing can help you modernize your kitchen, update your bathroom, add an extra bedroom, and more. Renovation loans can also be obtained when you purchase a home that needs fixing up.

Here in the Shenandoah Valley, local real estate markets are heating up. You may have more equity in your home than you realize. Whether you’re still in the dreaming phase or ready to hire a contractor, let’s explore what renovation loans are and the different types of financing you can obtain.

What are renovation loans?

A renovation loan is a great option if you don't want to move, but do want more space in your home.

There isn’t one type of home renovation or home improvement loan. We’ll explore the different options for renovation loans below; for now, all you need to know is that a home renovation loan is any type of financing used to renovate or improve your loan.

Why use a renovation loan?

There are many reasons to finance home renovations. Here are a few examples:

  • Take out a home renovation loan when you buy your house to make a fixer-upper livable.
  • It can be cheaper to finance an addition and other improvements to your existing home instead of covering the costs of selling it and buying a new one.
  • You may be able to sell your home quicker and for a higher price if you do a complete renovation first.

What can renovation loans be used for?

Renovation projects such as roof repairs, new siding, and updated windows will save you money in the long run and make your home a safer place.

There is almost no limit to what your home renovation financing can be used for. From cosmetic improvements to essential repairs, here are some ideas:

  • Roof repairs
  • New siding
  • Updated windows
  • New flooring
  • Installing/updating heating and cooling systems
  • Solar panels and other energy improvements
  • Mold remediation/waterproofing
  • New kitchen or bathroom that would add value to the house
  • Addition to add square footage/another bedroom
  • Get rid of termites and other unwanted pests

Home Renovation Costs in the Shenandoah Valley

Overall, the cost of a general home renovation project in Staunton, VA ranges from a minimum of $8,249 to a max cost of $65,998 with an average of $37,123.

In Harrisonburg, the range is $8,850 to $70,807 and the average is $39,828.

The average cost of a general home renovation project in Staunton, VA averages $37,123.

Let’s look at average costs for specific types of renovation projects:

Kitchen Remodel

  • The average cost in Staunton is $20,686.
  • The average cost in Harrisonburg is $21,283.

Bathrooms

  • The average cost in Harrisonburg is $9,208.
  • The average cost in Staunton is $8,242.

Pool Installation

The average cost of inground pool installation is $8,192 in Harrisonburg and $7,242 in Staunton.

The Pros and Cons of Using Renovation Loans

As with any financing decision, there are both benefits and risks to taking on a renovation loan. Our experienced mortgage team can help you weigh the pros and cons of your own situation so you can find the best solution for your home renovation needs.

Weigh the pros and cons of your own situation so you can find the solution for your home renovation needs.

Pros

  • Structured payments
  • Begin your project right away
  • Home equity loans usually have fixed rates, meaning your monthly payment is likely to stay the same each month.
  • You can move any unused money from your loan to an interest-bearing account to earn interest.
  • Interest rates for HELOC are low–and usually lower than personal loans or credit cards.
  • The flexibility of choosing what renovation projects to use the loan for

Cons

  • If the market value of your home declines, you may end up owing more on your mortgage and home renovation loan than your house could theoretically sell for. However, this is less of a risk if you plan to stay in your home long-term.
  • A home equity loan is a secured loan against your house so if you stop making payments the bank can take possession of your house.
  • The process of applying for a home renovation loan can be as involved and lengthy as applying for a mortgage, depending on the type of financing you choose.

Renovation Loan Options

When it comes to renovation financing, homeowners have many options to choose from. For homeowners in the Shenandoah Valley, F&M Mortgage offers renovation loans with as little as 5% down payment. Are all loan options created equal? Here’s what you need to know:

  • Home Equity Lines of Credit (HELOC): For homeowners who have ongoing renovation projects. A HELOC is a revolving account that can be used, paid back, and used again. Must have enough equity in your home (the difference between its current market value and any mortgage balances you have).
  • Home Equity Loan: A term loan, usually with a fixed rate and predictable monthly payments. Best for homeowners who need to finance just one (bigger) renovation project and want to pay off what they owe over a long period of time. Must have enough equity in your home.
  • Personal Loans: A decent option for homeowners without enough equity to qualify a secured renovation loan. However, an unsecured personal loan will usually have a higher rate. Best for smaller, less expensive projects.
  • Credit Cards: We don’t recommend using credit cards to fund home renovation projects and purchases unless you can re-pay the amount owed within the same billing cycle.
  • Cash-Out Refinance: Replace your existing mortgage with a new loan and get up to 80% of your home’s market value back in cash. Recommended for home improvement projects that add value to your house, but can be used for anything, including non-renovation expenses like college tuition.
  • FHA Title-1 Loan: Specifically for home improvement, this type of financing allows borrowers to fund repairs and renovations. No home equity required when borrowing less than $7500. Borrow up to $25k for single family homes and $60k for multi-family homes.

New Purchase Renovation/Improvement Loans

A FHA 203k Rehab Loan requires only a 3.5% down payment and a 640 credit score for first-time buyers.

  • FHA 203k Rehab Loan: Requires only a 3.5% down payment and you can receive up to $35k for repairs and renovations. Minimum 640 credit score and available for first-time buyers or refinancing.
  • Fannie Mae HomeStyle Renovation Loan: A combination purchase and renovation loan that provides up to $25k for renovations and improvements.
  • Freddie Mac Renovation Mortgage: Provides permanent financing to replace Interim Construction Financing. Can be used for land purchases, site-built homes, and renovations/repairs to existing homes.
  • VA Renovation Loan: No down payment and no private mortgage insurance.

Virginia Laws and Regulations

Check with your local municipality regarding permitting requirements. Here are two statewide rules to keep in mind as well:

  • Must obtain a permit before starting most large home renovations, and the house must be inspected before obtaining a permit.
  • Must provide the state with building plans, contractor licenses, and other applicable documentation.

Apply for a home equity loan or HELOC today!

Visit a branch near you or Contact Us to get started on your Home Equity Line of Credit with Free Debit Card Today.

Current F&M Bank Customers – Send us a message in Online Banking or Mobile Banking to get started!

 

F&M Bank Voted Among “Shenandoah Valley’s Best”

Owning vs. Leasing Commercial Real Estate in Virginia

After finding the right property for your business, how do you decide whether to buy or lease it? There are pros and cons with both options, including the opportunity to build equity and profit off the future resale of your commercial real estate property. Keep reading for a complete guide to owning vs. leasing commercial real estate so you can make the best decision for your business. As always, our business banking team is here to help if you have questions!

Pros and Cons of Renting Commercial Real Estate

Leasing commercial real estate can come with flexibility, but also leaves missed opportunities on the table. Consider the benefits and drawbacks of leasing with the information below.

Let’s start with the benefits of renting a space for your business:

  • No down payment, just need a security deposit and first month’s rent
  • Usually cheaper on a month-to-month basis, including fewer expenses for upkeep
  • Flexibility to move after lease is up if you outgrow the space or want to be in a newer building
  • Get the most desirable location possible, even if it’s not for sale
  • Easier accounting since your rented space is just a monthly expense, not an asset or liability

On the other hand, you need to consider these potential drawbacks:

  • You won’t build equity or benefit from capital appreciation if the property value rises
  • Rent is a monthly expense forever, whereas a commercial mortgage can eventually be paid off
  • You may be responsible for certain upkeep expenses on some leases
  • Rent may increase annually or with each new lease
  • No opportunity to earn passive income by renting out part of your space to others

Buying Commercial Real Estate: Pros and Cons

Owning commercial property tends to require preparation but comes with benefits for those looking to buy real estate instead of leasing. In the section below, we cover the pros and cons of buying real estate for your business.

Thinking that buying might be the way to go? Here are the benefits you stand to reap:

  • Equity increases over time and the asset value appreciates
  • Potential tax benefits and breaks for interest, depreciation, and other expenses
  • More control over the property and design or renovation decisions
  • Potential for renting out to other businesses
  • Improvements to the building and property add value for your business as the owner
  • Fixed mortgage payments as opposed to your rent potentially changing

On the other hand, owning may come with more expenses and responsibility:

  • Need enough cash upfront for a down payment, closing costs, and other fees
  • Can be hard to qualify for commercial real estate financing
  • Have to budget for the ongoing costs of upkeep
  • Less flexibility since you’re tied down to the location
  • Liability

Tips for buying commercial property

Once you understand how buying commercial real estate work and some of its related terminology, you'll be on your way to getting started. Explore our tips for buying commercial property below and reach out to our team for further assistance.

If you’ve only purchased residential property before, you’ll want to work with an experienced commercial real estate agent and ask questions throughout the process. Commercial real estate is a different animal from buying a home to live in, but once you understand how it works and the different terminology, you’ll be an expert in no time.

  • Some of the best commercial properties are not necessarily listed, which is why working with an experienced commercial real estate agent is so important.
  • Talk to your real estate agent at the beginning to be sure you understand how the buying process works and what information you’ll need to provide along the way.
  • When you’re ready to start the buying process, also talk to us about financing for your commercial real estate property. We can walk you through the steps and paperwork required to apply for a commercial real estate loan.
  • As you look at different properties, consider zoning, closing costs, tax issues, and environmental conditions.
  • If the building already has tenants, you’ll need to negotiate with the current owner/landlord over assignments of existing leases and delivery of current rents due. You’ll also want to obtain copies of the rent rolls and existing leases to make sure that neither the tenant nor seller is in default and that there is no past-due rent.
  • Negotiating with commercial landlords can be challenging. They can look to keep some legal tricks hidden from you: https://www.dietzlawfirm.com/commercialleasesecrets.htm

Contact us with all your CRE needs and questions!

Wherever your business is headed, F&M wants to help you get there. As a trusted community bank, we understand local business like no one else and believe that one business’s success contributes to the success of the entire business community.  For more help with the buying process, F&M Bank is here to be your local commercial real estate expert in Virginia. Real estate is a local business, so when you’re looking for a commercial land loan or other type of commercial real estate loan in Augusta County, you want to work with a local bank who knows the market. Call us today to discuss your business goals and we’ll help you reach them with flexible financing options.