Hard Money Commercial Mortgage Loans - Typical LTV Ratios - "What Size Loan Can I Get"?

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Privately funded, often called “hard money” commercial mortgage loans are primarily equity based loans. They are not credit driven they are underwritten on the basis of the amount of equity in the collateral property. Loan-to-value ratios (LTV) are more important in hard money commercial mortgage lending than they are in conventional lending. LTV is simply the percentage amount a lender is willing to loan against their perceived value of the target property.

Income Producing Properties

Stabilized, income producing properties such as apartment buildings and office buildings are the most sought after commercial real estate property type in the commercial mortgage industry. Private commercial mortgage lenders are generally willing to 65-70 (percents) LTV if a building can cover its own mortgage payment.

Vacant or Underperforming Buildings

“Improved” real estate, or real estate with a building on it, is considered more valuable than raw or unimproved land. Hard money lenders will not lend as much against vacant buildings as they will against stabilized buildings but most private commercial mortgage lenders can offer an LTV of around 60 (percents) on this type of asset.

Land

Land is increasingly difficult to finance during this “credit crunch”. Borrowers will struggle to find hard money lenders willing to finance any land deals at-all. The ones who still have an appetite for land loans are writing loans with an LTV of about 50 (percents).

One result of this tough credit environment that we are facing is that LTV has come down in all areas of lending. Borrowers and sponsors are going to have to come to the table with more cash if they want to secure funding today.

MasterPlan Capital LLC - Commercial Mortgage Loans - Privately Funded - Equity Financing - Asset Management - EZ Online Application - Quick Answers - Close in 7 Days - Glenn Fydenkevez is President of MasterPlan Capital, he has more than 20 years experience in the financial industry and has been a officer at one of the world’s largest investment banks. He uses his financial resources, banking contacts and extensive industry knowledge to finance commercial real estate deals quickly and efficiently.

November 24, 2008