Yield Maintenance (YM)

What is yield maintenance? Yield maintenance is used by lenders as a prepayment penalty. This guarantees the lender all of the scheduled interest payments. Lenders issue yield maintenance to safeguard the loan’s expected return on investment. This is seen as a safeguard as the yield maintenance places the responsibility of lost income from interest on […]

Single-Family Rentals (SFR)

What is a single-family rental? Single family rentals are often referred to as an SFR property. Single-family rentals are disconnected one-unit properties. The 2008 Global Financial Crisis led to a surplus of opportunities for SFR investors as home prices plunged. The SFR industry has been incredibly profitable and demand continues to grow. The SFR industry […]

Net Rental Yield (NRY)

What is the net rental yield? The net rental yield is a metric in the form of a percentage that shows how much cash your rental property generates annually after deducting expenses. The NRY is a percentage indicator of the property’s profitability relative to the property’s value. How is it useful? The yield answers vital […]

Loan-to-Value Ratio (LTV)

What is the LTV? The Loan-to-Value (LTV) ratio is a metric that helps lenders understand the amount of risk they will be taking on when lending to a borrower. How is it useful? The ratio answers vital questions for lenders such as: (1) What is the minimum down payment? (2) What is the interest rate? […]

Gross Rental Yield (GRY)

What is the gross rental yield? The gross rental yield is a metric in the form of a percentage that shows how much cash your rental property generates annually without taking into consideration annual expenses. How is it useful? The yield answers vital questions for lenders such as: (1) Is this property profitable? (2) How […]

Multi-Unit Rentals (Duplex, Triplex, Fourplex)

What are multi-unit (2-4 unit) investment properties? Multi-unit investment properties are residential assets with two to four units in a single property. For example: duplexes are two-unit properties, triplexes are three-unit properties and, fourplexes are four-unit properties. What is a duplex? Duplexes are multi-unit rentals with two units under one rooftop. Each unit has a […]

Debt-Service Coverage Ratio (DSCR)

What is the DSCR? The debt-service coverage ratio is a metric that shows lenders if a borrower generates enough income to cover their annual debt obligations. How is it useful? The ratio answers vital questions for lenders such as: (1) Does this property generate enough cash flow to cover its debt obligations from operations? (2) […]

Combined Loan-to-Value Ratio (CLTV)

What is the CLTV ratio? The Combined-Loan-to-Value (CLTV) ratio is a metric that helps lenders understand the total amount of risk they will be taking on when lending to a borrower. Unlike the LTV ratio, the CLTV ratio takes into consideration all of the borrower’s debt obligations. This is a more comprehensive perspective of the […]

Capitalization Rate (CAPR)

What is the CAP rate? The capitalization rate is a metric in the form of a percentage used to reveal the rate of return of the investment property over a one-year time span. The CAP rate is shaped by the net operating income and the appraised value of the property. How is it useful? The […]

Amortized vs Interest Only

What is an amortized loan? An amortized loan is a loan that follows an amortization schedule of equal monthly payments. The loan’s balance will be paid in full by the maturity date. How do lenders calculate the monthly payment of an amortized loan? Lenders calculate the monthly payment using an the excel function PMT. The […]