tailieunhanh - Commercial Real Estate Investing For Dummies For Dummies Business Personal Finance_7

Tham khảo tài liệu 'commercial real estate investing for dummies for dummies business personal finance_7', tài chính - ngân hàng, đầu tư bất động sản phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | 144 Part III Funding Your Deals Financing and Lending you might see in residential real estate . Because loans made on commercial properties are much larger than on residential properties commercial lenders have stricter lending guidelines. So because of the greater risks involved commercial lenders want the borrower to invest money or equity in the property. This way they share in some of the risks or have some skin in the game as it is sometimes called. When purchasing a single-family home on the other hand the down payments can fluctuate. It may be 20 percent or more of the purchase price or it may be as low as 0 percent. When the residential lender doesn t require a down payment it means that the buyer has no equity in the property. How Lenders Evaluate Properties Commercial lenders are people of a different breed. Think about it They live and die making decisions based on Excel spreadsheets. They look at properties from a different point of view than the rest of us investors. So it s wise for you to understand where they re coming from when they reject your deal. In this section we help you to understand them and we show you how to put your best foot forward in getting your deal approved for the best loan. In order to understand how lenders evaluate properties you need to examine their three main deal prequalifiers the property s income the quality of the property and the strength of the borrower. Determining the property s income Income is a vital ingredient to the lender s approval process. Not only must there be income but there must also be enough income to satisfy paying the mortgage and property operating expenses. Lenders measure this in two ways as described in detail in the following sections debt coverage ratio and loan-to-value ratio. Debt coverage ratio A lender s first checkpoint when determining a property s income is the debt coverage ratio which is the ratio of net operating income to debt payments. This ratio basically answers these questions