| Privately funded, often called "hard money" commercial | | | | "Improved" real estate, or real estate with a building on |
| mortgage loans are primarily equity based loans. They | | | | it, is considered more valuable than raw or unimproved |
| are not credit driven they are underwritten on the | | | | land. Hard money lenders will not lend as much against |
| basis of the amount of equity in the collateral property. | | | | vacant buildings as they will against stabilized buildings |
| Loan-to-value ratios (LTV) are more important in hard | | | | but most private commercial mortgage lenders can |
| money commercial mortgage lending than they are in | | | | offer an LTV of around 60% on this type of asset. |
| conventional lending. LTV is simply the percentage | | | | Land |
| amount a lender is willing to loan against their perceived | | | | Land is increasingly difficult to finance during this "credit |
| value of the target property. | | | | crunch". Borrowers will struggle to find hard money |
| Income Producing Properties | | | | lenders willing to finance any land deals at-all. The ones |
| Stabilized, income producing properties such as | | | | who still have an appetite for land loans are writing |
| apartment buildings and office buildings are the most | | | | loans with an LTV of about 50%. |
| sought after commercial real estate property type in | | | | One result of this tough credit environment that we are |
| the commercial mortgage industry. Private commercial | | | | facing is that LTV has come down in all areas of |
| mortgage lenders are generally willing to 65-70% LTV | | | | lending. Borrowers and sponsors are going to have to |
| if a building can cover its own mortgage payment. | | | | come to the table with more cash if they want to |
| Vacant or Underperforming Buildings | | | | secure funding today. |