Investor Property Loans

Commercial loans on investor real estate can be difficult to find. Most lenders will only allow a 60%-65% LTV and sometimes 50% LTV if you want cash out in your loan. Your DSC (debt service coverage) needs to be above 1.25 in order to have sufficient cash flow to acquire the loan you need. Lenders will review your property and evaluate the risks and benefits specific to your property.

Multi-family unit properties make great commercial loans because they typically cash flow well and have many tenants. The risk of repayment is spread out over several units instead of one major tenant. Because the risk of repayment is low due to many tenants, loans on multi family unit properties can be non-recourse. These loans can have very low fixed rates. One of our lenders will provide up to 80% LTV. These lenders will provide a loan after 60-90 days of stabilized cash flow.

Commercial real estate typically only has a few tenants. This makes the property have a little more risk. If one tenant decides to leave it can put a strain on cash flow. Interest rates and terms on these property types are typically not as competitive as multi-family unit properties.

Lenders will analyze your cash flow and value your investor property with an NOI (net operating income) value. The income is discounted by vacancy, maintenance and repair factors. The bottom line is an expected cash flow figure the lender feels confident they reasonably can count on. It is this figure that is used to debt service your loan request. In addition, the NOI is also used with a CAP rate to determine the value of your income property.

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