If you purchase retail income property with good location in a growing neighborhood, this can be a good way to capitalize on your tenant's growing business without raising rent. Most income property owners charge from 5% to 10% of their tenants' gross monthly sales revenue.

When it comes time to finance purchase of your commercial income property, a private lender can usually provide better options and interest rates than your bank or credit union. A private lender is in a position to provide best option for two main reasons; 1) unlike your local bank, private lenders specialize in income properties (as opposed to home loans), and 2) private lenders are more selective in their loan requirements allowing them to provide better terms for those borrowers they accept.

Loan terms (the time lender gives you fully repay loan) for commercial income property typically ranges from five to twenty years. Many private lenders will also have a minimum and maximum loan amount which usually goes from $500,000 to $2 million.

Interest rates can run from 5.60% to 7.20%; substantially lower than most competitive bank. It's also important to know your lender's LTV (loan-to-value) ratio. The LTV is simply ratio of money borrowed on a property to property's market value. In other words, you will have to come up with a certain amount money yourself before you will be considered for a loan. Currently, most private lenders offer LTV's of 70% to 75%. If you plan on financing purchase a $1.5 million office building with a lender offering a 75% LTV, you will need to come up with at least $375,000.

In next segment, Residential Income Property Financing: Part 2 of 3, we will be discussing how to finance and effectively manage an apartment complex.

Employ defensive tactics - know that if something looks like a bargain and is selling at a price that is ‘too good to be true,’ chances are you should walk away! Remember how you would behave if you were buying back home and while I’m definitely not suggesting you set out determined to see bad in everyone and convinced that each person you speak to is trying to rip you off, I am telling you that not everyone you come across will have your best interests at heart!

Find out how property buying process works in region of Spain you’re interested in, you need to know whether you will be asked for a securing deposit when you register an interest in a property, you need to know how much this will likely be. You have to know whether an offer is legally binding, you need to understand how property law works in your region of choice. All this research can be done before you even set foot on plane! If you arm yourself with solid basic facts then you will be in a strong, confident position and you will be less likely to fall for estate agent exaggerations.

Don’t be rushed into making a decision or parting with cash. Make sure you employ independent and qualified legal support to ensure your interests are protected. If you are unsure of meaning of any paper work you are asked to sign make sure you get it translated. Pay attention to detail – make sure boundaries are marked on contract you sign, make sure your solicitor confirms them with local land registry office.

Never ever assume anything; never ever accept it when someone assures you of a fact…get facts and assumptions confirmed by having them written into legally binding contract. Don’t become a victim of Spanish property market by failing to do your homework and by being a passive purchaser.

Do your comprehensive and boring homework and approach buying a property in Spain in same way you would approach buying a property back home – it really is that simple!