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Loan-To-Value (LTV) simply means the amount of the loan divided by the sales value of the property. Lower LTVs means lower risk, as there is greater collateral value securing the loan. While Wall Street banks make 90-95% LTV loans on owner-occupied properties, the Fund makes loans where the LTV at completion of improvements will be approximately (50-70%).
Long term loans can leave investors exposed to changing real estate markets and shifting economic cycles. At the Fund, we focus on short-term loans – typically between 6 and 18 months in duration. By focusing on shorter-term loans, we can underwrite loans to a specific set of market conditions and quickly adapt to the changing market.
For each loan, we underwrite with the intent on how the fund will be repaid, even if the borrower defaults. This detailed underwriting includes a thorough analysis of the borrower’s experience, credit worthiness, capital verification, ability to complete the proposed renovation plan, and overall market conditions. Every loan is insured, attorney reviewed, and underwritten by a licensed mortgage broker.
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