To start your property investment company, you’ll need to get your first loan. Although most people are familiar with commercial loans, getting an investment loan is a different experience. These loans can present some additional challenges.
Although residential and commercial loans are the same, there are different factors that determine whether you are eligible to close the loan. You can also get more information about commercial property investment loans via https:/
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Before you talk to a lender, it is important to know the three most common ratios commercial lenders use to assess risk. You will be better equipped to discuss these ratios with your lender. You will increase their willingness to do business with your company if they are prepared.
LTV (loan-to-value ratio) is the first thing your lender will be looking at. LTV is the same thing as residential lending. It simply measures the amount of debt on the property compared to the property’s actual market value.
To lend on investment property, most lenders require a minimum DCR of 1.2. Lenders will not lend on the investment property if the DCR is lower than 1.2.
The lender will use your debt ratio to determine how well you manage your finances and whether you are able to afford the loan. If your personal debt ratio exceeds 25%, most commercial lenders won’t lend to you. You can even search online for more information about commercial property investment loans.