My 2¢ - Posted by Marvin Seawood
Posted by Marvin Seawood on December 17, 1998 at 11:20:21:
LTV is important, but so is ITV, e.g. $100,000 sale,
$100,000 note; would you be interested if you could
get the note for $70,000?
I would, the 100% LTV is not a problem for me. What
might be a problem would be the terms of the note.
If I did not receive anything for a dozen years, at
which point I received the entire $100,000, $10,000
might be too much too pay.
It would also be a problem if I determined that the
property was worth not $100,000, but $80,000.
So there are (at least) two scenarios in which I
would overlook the LTV and base my buying criteria
on my ITV: High LTV, buying at a significant discount
And acceptable LTV, but property is overvalued.
To some extent, the payor’s credit is important, but
not nearly as important as the property or paper.
The ratios for business, raw land etc. are lower.
And that’s all I know, for the time being. As a
beginner, I’ll stick to SFRs.