X

The browser version you are using is not recommended for this site.
Please consider upgrading to the latest version of your browser by clicking one of the following links.

Loan To Cost (LTC) Ratio – Understanding LTC vs LTV

Understanding loan to cost meaning is quite important to investors. This ratio is a valuable metric used in commercial real estate construction (and other areas) to determine whether a transaction may be profitable or beneficial to that investor. It compares the cost of financing a project (usually as a loan) to the cost of building the project. By utilizing this metric, lenders can better determine … Read More

Loan To Value (LTV) Ratio Overview & Formula

Loan to value ratio is a standard metric that lenders use to assess default risk and qualify commercial real estate loans. While it’s far from the only data point lenders consider, it’s one of the most basic and often checked early on during the loan application process.

What is a Loan to Value Ratio?

Loan to value (LTV) ratio is a straightforward way to measure … Read More

Guide to Business Credit Scores

Business credit scores can have a dramatic impact on the availability and cost of financing, and any impact is only magnified for commercial property financing where investors need to borrow large sums. For investors, developers and managers, understanding the role of a company’s financial score is essential.

What is a Business Credit Score?

The purpose of a business financial score is to help various … Read More

Net Operating Income (NOI) & How To Calculate It

Real estate investors need information. The more information they have, the better the decisions they can make. There are a lot of tools to provide this information, but one of the most important is net operating income (NOI). Understanding what this calculation is and how to use it can help investors make decisions quickly regarding any property an investor is considering.

What Is Net Operating … Read More

Debt Service Coverage Ratio for Real Estate

The debt service coverage ratio (DSCR) offers a key but often misunderstood tool for all commercial real estate financing parties. For instance, investors may use this formula to adjust offers, track performance, calculate profit margins, and determine when they should obtain financing or seek to refinance. In contrast, lenders employ the figure during underwriting to decide if the property earns enough income … Read More

What Are Cap Rates in Commercial Real Estate?

Cap Rate for Commercial Real Estate

Capitalization rates calculate the expected annual return on investment that commercial real estate properties will generate. Cap rates can show investors how much they might expect to receive from a particular property, and thereby provide a metric for evaluating the property.

Cap rates are often looked at by lenders when financing commercial property, this is one … Read More

What is Debt Yield and How Does it Apply in Commercial Real Estate

Debt yield hasn’t traditionally been a primary commercial real estate loan underwriting metric, but more lenders are incorporating it into their criteria. In the current real estate market, measuring debt yield ratios provides lenders with a stable assessment regardless of unusual or changing conditions.

What is Debt Yield?

Debt yield is a standardized way to measure net operating income … Read More

Top Tax Benefits When Investing in Commercial Real Estate

Commercial real estate (CRE) is an attractive investment for investors for many reasons, but the tax benefits are a significant draw. Over the course of the life of an investment, these tangible benefits can lead to a substantial difference in returns.

Understanding the tax benefits associated with CRE is a tall order, but if you’re considering an investment, here are eight top … Read More

How Much Are Commercial Property Closing Costs?

The closing costs on a commercial investment property are can become substantial, often reaching tens of thousands. If you’re purchasing an investment property, here’s a breakdown of the various commercial property closing costs you can expect.

Flat-Fee Commercial Property Closing Costs

The simplest commercial real estate closing costs are flat-fee expenses that remain relatively standard across all investment properties. These include title … Read More

How To Build a Personal Financial Statement For Commercial Loans

A personal financial statement is often among the required documentation when applying for a business loan. Even though business loans are distinct from personal loans, lenders might want to see the borrower’s personal financial situation for a variety of reasons. If you’re applying for a business loan soon, here’s an explanation of what this document is and how to go about making a personal … Read More