S1E52 - The Nuances of Loan to Value (LTR) and Reinvesting

Joseph discussed the nuances of loan-to-value (LTV) ratios in real estate investing. He explained that LTV is the ratio of the loan amount to the appraised value of the property, and it is a key assessment factor for mortgage approval. He emphasized that a lower LTV ratio is generally better, as it indicates a larger equity stake and can lead to better financing terms. Joseph also cautioned against second position loans, which he believes can be risky and unnecessary. He suggested focusing on cash-on-cash return and considering the LTV ratio when deciding on a property's potential for investment. Linda, a real estate agent and investor, also shared her insights on LTV ratios, emphasizing the importance of understanding them for successful investing. 

Joseph explained the loan to value and loan to cost ratios, and how they are derived based on various factors such as credit score, asset type, loan amount, renovation costs, and insurance. He clarified that new investors could receive up to 83% of the purchase price, while those with good credit and experience could get up to 85% or even 90% of the purchase price. He also discussed the complexities of financing new construction projects, stating that lenders would typically provide up to 65% of the land acquisition costs and up to 75-80% of the construction costs, effectively offering almost 100% financing for the construction side. 

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