Commercial Construction Loans

Commercial and Apartment Construction Loans

"Net-Worth-to-Loan-Size Ratio"

In a Perfect World the Developer's Net Worth

Should Be as Large as the Construction Loan

Commercial construction lenders - over 500 of them - await your application for a multifamily or apartment construction loan, a commercial construction loan, a condo or residential subdivision construction loan, or a land development loan. To apply to 400 banks and 100 hard money construction lenders simply click here.

Historically commercial construction lenders have required that a developer's net worth be at least as large as the construction loan that he is requesting. In a perfect world, if the developer is applying for a $5 million construction loan, he should have a net worth of at least $5 million. Fortunately commercial construction money is so plentiful today that many construction lenders are relaxing this requirement.

The test that commercial construction lenders apply is the Net-Worth-to-Loan-Size Ratio. Simply divide the net worth of the developer by the loan size. This result should be greater than 1.0. During recessions, banks will often require this ratio to be as high as 1.5.

What if there are several members of the development company with a decent net worth, but none of them alone satisfies this test? Answer: You can combine the net worth of the developers.

Commercial construction money is immensely plentiful today, so lenders are relaxing the Net-Worth-to-Loan-Size Ratio. How low will they go? Nothing is written in stone, but some commercial construction lenders may consider a Net-Worth-to-Loan-Size Ratio as low as 0.75.

But if the developer's net worth is not even 75% of the commercial construction loan that he is requesting, then the loan request is seriously flawed.

Commercial construction lenders - over 500 of them - await your application for a multifamily or apartment construction loan, a commercial construction loan, a condo or residential subdivision construction loan, or a land development loan. To apply to 400 banks and 100 hard money construction lenders simply click here.

George Blackburne, III is a real estate attorney, the founder of Blackburne & Brown Mortgage Company, Inc. http://www.c-loans.com/onlineapp

Real estate editors and webmasters: You are authorized to re-print all or any part of this article, as long as you include the above byline and link.









Commercial and Apartment Construction Loans "Net-Worth-to-Loan-Size Ratio" In a Perfect World the Developer's Net Worth Should Be as Large as the Construction Loan Commercial construction lenders - over 500 of them - await your application for a multifamily or apartment construction loan, a commercial construction loan, a condo or residential subdivision construction loan, or a land development loan. To apply to 400 banks and 100 hard money construction lenders simply click here. Historically commercial construction lenders have required that a developer's net worth be at least as large as the construction loan that he is requesting. In a perfect world, if the developer is applying for a $5 million construction loan, he should have a net worth of at least $5 million. Fortunately commercial construction money is so plentiful today that many construction lenders are relaxing this requirement. The test that commercial construction lenders apply is the Net-Worth-to-Loan-Size Ratio. Simply divide the net worth of the developer by the loan size. This result should be greater than 1.0. During recessions, banks will often require this ratio to be as high as 1.5. What if there are several members of the development company with a decent net worth, but none of them alone satisfies this test? Answer: You can combine the net worth of the developers. Commercial construction money is immensely plentiful today, so lenders are relaxing the Net-Worth-to-Loan-Size Ratio. How low will they go? Nothing is written in stone, but some commercial construction lenders may consider a Net-Worth-to-Loan-Size Ratio as low as 0.75. But if the developer's net worth is not even 75% of the commercial construction loan that he is requesting, then the loan request is seriously flawed. Commercial construction lenders - over 500 of them - await your application for a multifamily or apartment construction loan, a commercial construction loan, a condo or residential subdivision construction loan, or a land development loan. To apply to 400 banks and 100 hard money construction lenders simply click here. George Blackburne, III is a real estate attorney, the founder of Blackburne & Brown Mortgage Company, Inc. http://www.c-loans.com/onlineapp Real estate editors and webmasters: You are authorized to re-print all or any part of this article, as long as you include the above byline and link.				Commercial Construction Loan App Apartment Construction Loan App Mezzanine Loan App Commercial Permanent Loan App Commercial Real Estate Loans Construction Loans Structured Finance Hard Money Loans Bridge Loans Land Loans Acquisition and Development Loans Profit Test Loan-to-Value Ratio Mezzanine Loans Loan-to-Cost Ratio Takeout Loan Debt Service Coverage Ratio Net-Worth-to-Loan-Size Ratio Conduit Loans Earn 10% Interest The Syndication of Large Commercial Construction Loans Commercial Financing and Underwriting Commercial Construction Loans Commercial Financing and Understanding the Hard Costs of a Commercial Construction Project Commercial Construction Loans and Soft Costs Commercial Construction Loans and Land Costs Commercial Construction Loans and Computing the Interest Reserve Commercial Financing and Interviewing the Developer Commercial Financing of Condo Conversions Involve Entitlement Risk Commercial Financing and C.V.'s Land Development Financing and Horizontal Improvements C-Loans Home Debt Yield Ratio


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