Terms

Any loan where the primary purpose is for the borrower to acquire the property where the intent is generally subsequent financing.

Asset Repositioning is the process of implementing capital improvements into an already existing property in a way that often completely changes the building’s purpose and function. This can be done to bring the building more in-line with comparable buildings in the area, or to transform the building’s purpose to meet the needs of the builder. An example of Asset Repositioning is taking an existing hotel and rehabbing it into a multifamily investment property.

A balance sheet lender is a private lender who is not affiliated with a bank. A balance sheet lender provides a monetary loan for a short-term duration. The lender maintains the full debt until the borrower completes their term and pays back the loan. Unlike traditional lenders, it is rare for a balance sheet lender to sell the debt to another lender. The benefit is a simplified process that includes in-house underwriting and servicing.

A bridge loan is where the primary purpose is to provide the borrower with sufficient time to lease and stabilize or restabilize an asset with sufficient cash flows to obtain permanent financing or sell the asset.

A loan for a developer to construct housing with the intention of renting it upon completion.

A developed lot that typically has roads, curbs, gutters, and utilities complete entitled for commercial construction.

A lot entitled for commercial construction, which would typically begin with horizontal improvements.

Single-family units within a building structure that are each separately owned, surrounded by common areas that are jointly owned. Condo units typically do not have ownership of the land.

DSCR is a measure of the cash flow available to pay current debt obligations. Lenders will analyze a borrower’s DSCR to determine whether or not they have enough liquid assets and income to pay off debts.

A two-unit attached residential building that is built with the intent to rent out upon completion.

A four-unit attached residential building that is built with the intent to rent out upon completion.

Any loan where the primary purpose is to provide the borrower with funds to build or install horizontal improvements (e.g. utilities, roads, sewers etc.) on real property.

A multi-unit residential building that is built with the intent to rent out on a short-term basis upon completion.

A property in which the primary use is non-specific manufacturing and other light commercial uses.

Any loan where the primary purpose does not neatly fit into the other loan purpose categories (e.g., cash-out refinance, partnership buyout, etc.)

Any loan where the primary purpose is to entitle land, obtain specific zoning, permitting, or legal use to further develop or accept the property.

Loan to Cost compares the financing amount of a commercial real estate loan to its cost. It is calculated by dividing the loan amount by the anticipated construction cost

Loan to Value measures the amount of a real estate loan month’s mortgage, compared to the appraised value of the property. The higher your down payment, the lower your LTV ratio.

A private real estate lender loans their money directly to a borrower. Private lenders and private lending companies are not affiliated with traditional bank lenders. Private lenders set their own terms, conditions, and interest rates.

Any loan where the primary purpose is to provide the borrower with funds to renovate (including adaptive reuse projects) or improve the physical existence of real property.

A developed lot that typically has roads, curbs, gutters, and utilities complete and is entitled for residential construction.

A developed lot that typically has roads, curbs, gutters, and utilities complete and is entitled for residential construction.

A five+ unit residential building that is built with the intent to rent upon completion.

A lot that is entitled for residential construction, which would typically begin with horizontal improvements.

A property zoned and constructed for retail (restaurants, retailers, etc.) tenants.

A property with storage units that are rented on a short-term basis.

A free-standing single-family residential building that is built with the intent to rent out upon completion.

A free-standing single-family residential building that is built with the intent to sell upon completion.

Single-family terraced housing with a small footprint on multiple floors. Typically, there is ground floor ingress/egress to the unit.

A three-unit attached residential building that is built with the intent to rent out upon completion.

Land with zoning or permitted use is non-specific in nature.

Urban Infill is when builders construct new residential units on underutilized or undeveloped land that is inside of already-developed areas such as neighborhoods. Already existing buildings typically surround the new construction and is therefore “filling in” the remaining gaps.

Any loan where the primary purpose is to provide the borrower with funds to build or install new vertical improvements on real property.

A property constructed for the storage and routing of goods. Ceiling heights, truck bay count, and ingress/egress are meaningful factors in assessing building values.