When it comes to this chaotic economic environment generally what’s a good bargain for you is not necessarily a great one for the lender. Let me explain how things work today.
Let’s say you look at this vacant apartment building and after doing your math the potential Cap. Rate is at 15%. Awesome, you think! The lender should be able to see its potential so there should be no problem securing financing. Well, not quite! The first thing the lender thinks about is risk. What if you default on the loan and they get stuck with a vacant property that generates no returns? A lender’s willingness to invest in your deal will be based on the “What if’s” that are thoroughly analyzed.