Investor Loan Glossary
After Repaired Value (ARV)
This is an important part of the process when analyzing a rehab project. The Investor prepares a Scope of Work and Budget which is used to determine the level of value the Investor will create after the work has been done. ARV is a future LTV.
Debt Service Coverage Ratio (DSCR)
This is a ratio used to analyze the cash flow on an investment property. The formula is: Total Rental Income ÷ PITIA (Principal, Interest, Taxes, Insurance, Association Dues). When the number is above 1.0 – this represents a positive cash flow.
Loan to Value (LTV)
This is a ratio used to measure the percentage of debt borrowed versus the Fair Market Value of a property. The formula is: Loan Amount ÷ Fair Market Value.
Loan to Cost (LTC)
Residential Transition Loans (RTL)
These are short term loans. The typical term is 12 months. All Bridge, Fix N Flip, and Rehab Loans are in the RTL category.