The collateral coverage ratio represents the percentage of a loan secured by a discounted asset and is used by lenders to set maximum loan limits. For example, mortgage lenders typically value property at a discounted rate of 80% of fair market value (FMV) and offer loans with a minimum collateral coverage ratio of one, or…
Cross Collateralization: What it is & Why it’s Important
Cross Collateralization typically occurs when one asset is used as collateral for two or more loans. It also occurs when a borrower uses a group of assets to secure a group of seemingly unrelated loans. This commonly happens when someone has multiple loans at a single bank that uses the combined assets as collateral for…
What Is Fixed Charge Coverage Ratio: How to Calculate & FCCR Formula
The Fixed Charge Coverage Ratio (FCCR) indicates a firm’s ability to pay its fixed charge obligations (expenses) from its income before interest and taxes. It determines the extent to which recurring charges consume the company’s cash flow. The ratio derived from the computation is the number of times a firm can cover its fixed expenses…
What is Asset Turnover Ratio: How to Calculate & Formula
The asset turnover ratio is the percentage of a company’s revenue to the value of its average total short- and long-term assets. It measures how efficient a company is at using its assets to generate revenue. For example, if your net sales are $20,000 and average total assets are $12,000, then your asset turnover ratio…
Conquest Funding, Inc. Reviews & Rates
is a hard money lender that offers loans between $50,000 to $500,000 for real estate investors in Pennsylvania. Their interest rates range between 12% to 14%, and they lend up to 65% of ARV. Conquest Funding, Inc. was established in 2011 and has generated over $10 million in loans. There are no reviews found online….
Trailing Twelve Months (TTM) – What It Is & How To Calculate It
Trailing twelve months (TTM), also known as the “last twelve months (LTM),” represents the most recent 12-months of data used for financial reporting. It typically measures past revenue or profits and is an effective way to analyze financial data in an annualized format. This shouldn’t be confused with a calendar or fiscal year. For example, a…
Blanket Mortgage Fundamentals: Rates, Terms, Qualifications and More
A blanket mortgage enables real estate investors to buy, hold, and sell multiple properties under a single financing arrangement, which is more efficient than having multiple individual mortgages. With a blanket loan, properties can be sold without triggering the “due on sale,” which allows proceeds from the sale to be used to purchase more property….
How to Buy Land – The Ultimate Guide
Buying land is an often overlooked form of real estate investment that can produce good returns. Land is a fairly hands-off investment, but generating returns is more involved than with rental property. This is because to buy land, there’s more research, evaluation, and firm profit strategy needed. Here are four stages to buying land and…
What is the Loan-to-Cost (LTC) Ratio: How to Calculate & LTC Formula
The loan-to-cost ratio (LTC) measures the percentage of a property’s acquisition, rehab, and construction costs that’s financed by a loan. It is typically used for commercial mortgages, fix-and-flip loans, and construction loans. The LTC helps investors set budgets for their down payment and expected monthly payments and calculate potential profits. Loan-to-Cost Ratio (LTC) Formula Calculating…
What is Loan-to-Value (LTV) Ratio: How to Calculate & LTV Formula
The loan-to-value (LTV) ratio measures the percentage of a property’s value that’s being financed with a loan. Lenders typically set maximum LTV rates, which are often used by investors and homebuyers when budgeting for a project. The maximum LTV rates available to a borrower are based on the specific loan type, lender, as well as…
What is After Repair Value: How to Calculate + ARV Formula
The after repair value (ARV) estimates the future value of a distressed property after it’s been repaired. ARV is not a property’s current value when purchased but rather the estimated value of the property once improvements are made. ARV is commonly used by fix and flip investors who purchase, renovate, and sell properties within 1…
HUD Loans: 4 Types of Housing & Urban Development Financing
The U.S Department of Housing and Urban Development (HUD) doesn’t offer direct financing for their HUD homes. Some investors use cash to buy a HUD home but oftentimes they use hard money loans for HUD financing. Other HUD loans for owner occupants include FHA 203K mortgages, conventional mortgages, and FHA mortgages. If you’re looking to…