Loan to Value explained - for me

[Benjamin Barredo]

Hello.

So, I'm ready to make my move. I'm analyzing deals as best I can (I don't have enough knowledge to really know the rehab and fixed costs - where's a good place to learn that for my area?) and I'm finding potential deals all over town.

But before I begin chasing partners and investors, I want to write out my business plan as the #BPUBGTREI suggests. (I bet hashtags don't work on here...)

I am at my criteria and the books says to define my loan to value. I know that LTV refers to what the bank will loan me. So does that mean I need to have a minimum and maximum LTV that I'll accept? Or do I only look for deals that will allow me to get an LTV that still keeps it as a good deal?

Thanks.

[Meghan McCallum]

As you said, the LTV is what a lender will use to determine how much they will finance for you. Most banks will only loan you 75% of your purchase price or 75% of the ARV. Therefore if you are planning to BRRR you need to know your ARV to determine what your all in cost can be on a project. Without knowing what rehab costs are it will be hard for you to determine if a deal is a good one.