Real Estate Broker · San Diego, CA · Member since 2009 · 119 posts · 54 votes
9y
There are two primary things they look at.
The loan to value which is never less than 80% unless it is a hard money loan or other very rare circumstances or
The Debt Coverage Ratio DCR which will vary depending on property type (I.e. Retail, multi family, industrial etc.), the market your in and the borrower but a safe number is a 1.2 DCRz
The DCR basically is the ratio of net income needed after all expenses including mortgage vs your mortgage.
So for easy math if your loan is $100,000 per year your NOI at 1.2 DCR needs to be at least $120.000.
Hope Thad helps
Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
9y
On my first deal I was offered 30% down. 25-35 is typically around here. 20% for first timers and cheap places would be tough to find or your rate will suck.
Rental Property Investor · Austin, TX · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Kevin Malone Yes, usually minimum 20%. Sometimes you can get the seller to hold a second mortgage for some of this - maybe all if you are lucky - but the bank will likely want to see you have some skin in the game.
Real Estate Broker · San Diego, CA · Member since 2009 · 119 posts · 54 votes
9y
There are two primary things they look at.
The loan to value which is never less than 80% unless it is a hard money loan or other very rare circumstances or
The Debt Coverage Ratio DCR which will vary depending on property type (I.e. Retail, multi family, industrial etc.), the market your in and the borrower but a safe number is a 1.2 DCRz
The DCR basically is the ratio of net income needed after all expenses including mortgage vs your mortgage.
So for easy math if your loan is $100,000 per year your NOI at 1.2 DCR needs to be at least $120.000.
Hope Thad helps