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In the real estate investing world, the use of leverage when purchasing assets is a virtual certainty.
Location, location, location. That sentence is perhaps the most common platitude uttered when discussing the most important factors in real estate investment. To a large extent location is the most important thing in real estate but commercial real estate has another crucially important wrinkle; let’s talk about zoning.
Commercial real estate financing involves several different kinds of loans. In order for real estate investors to be able to borrow the money they need to finance their project, both the investor and their project must be assessed for risks. The more risk identified with the borrower or the project, the stricter terms lenders will offer. That’s where LTC and LTV come into play. Below we define what the two terms mean, how they work, and what their roles are in CRE financing.
Commercial real estate is broadly defined as any property that generates a profit through income in addition to capital appreciation. Income is earned through the leasing out of the property, while appreciation is captured at disposition. Millions of people have invested in commercial real estate over the years – and not everyone is an expert.
Lease Up Schedule Defined