FAQs
Investor Financing Questions
Search the questions investors ask most often, organized by financing type and stage of the process.
A business-purpose loan is made for investment or business reasons rather than for a personal, family or household purpose. Investment-property financing is generally business purpose, which is one of the reasons it is underwritten differently than an owner-occupied mortgage.
Helpful details include the property address, purchase price or current value, the loan amount requested, the scope of work or construction budget if applicable, your projected value at completion, your timeline and your intended exit strategy.
Investors often reach out while a property is under contract, but scenarios can also be discussed earlier so the financing approach is understood before an offer is made.
ARV stands for After Repair Value: the estimated market value of a property once the planned renovation scope is complete. It is typically supported by an appraisal and comparable sales.
LTC stands for Loan-to-Cost, a ratio comparing the loan amount to the total project cost, which on a renovation project may include both acquisition and rehab budget.
DSCR stands for Debt Service Coverage Ratio. It compares the income a property produces against its debt obligations, and it plays a central role in how rental property financing is evaluated.
In its simplest form, DSCR is property income divided by debt obligations. Definitions of income and of the obligations included in the calculation vary by program, so the exact inputs should always be confirmed.
Typically the land details and whether it is owned or being acquired, plans and permit status, a line-item construction budget, the builder or general contractor, the projected timeline, the completed value estimate and the intended exit.
Once underwriting conditions are satisfied, the transaction moves toward closing with title, insurance and entity documentation coordinated ahead of funding.
You submit the referral through the referral form, WJR Equity Lending reviews the opportunity, and if it is a fit WJR works directly with the borrower on their financing scenario.
Have a question that is not answered here? Contact William J. Reich directly to discuss your financing scenario.
Working on a deal?
WJR Equity Lending can review your financing scenario and discuss what options may be available for the property, project and exit strategy.