Viewing articles for the category Debt
In the real estate investing world, the use of leverage when purchasing assets is a virtual certainty.
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 mortgage-backed securities (or CMBS for short) are also known as conduit loans. These types of loans are secured by mortgages on commercial real estate rather than residential properties. They are useful in that they are a way of providing liquidity to both real estate investors and lenders.
Debt Service Coverage Ratio, or DSCR, is one of the most important ratios when it comes to real estate financial modeling.