When acquiring property, buyers often ask how much financing they can secure. This process involves assessing the deal, determining the financing options, and constructing a capital stack. Key metrics such as loan-to-value (LTV), loan-to-cost (LTC), and loan-to-project cost are used to evaluate financing potential. LTV compares the loan to the property’s appraised value, while LTC focuses on the loan relative to the purchase price. For projects with additional costs like renovations, loan-to-project cost is crucial in determining the total financing needed.
Sizing Up Commercial Real Estate Investments: A Guide
