A high-level overview of conventional commercial loan concepts: LTV, DSCR, amortization, and how they affect returns.
Loan-to-Value (LTV) is loan amount divided by purchase price or appraised value. Debt Service Coverage Ratio (DSCR) is NOI divided by annual debt service. Amortization is the period over which principal is repaid.
Positive leverage occurs when a property's unlevered yield (cap rate) exceeds the borrowing cost. In that scenario financed cash-on-cash return typically exceeds the cap rate; negative leverage inverts the relationship.
A property offered free and clear lets each buyer choose optimal capital structure — cash, conventional financing, or exchange proceeds — without assumption or defeasance friction.
Educational content only. Not tax, legal, or investment advice. Consult qualified professionals for your specific situation.
Full financials, rent roll, and expense recovery detail. Watermarked PDF after approval.
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