Fluctuating LTV

The loan-to-value (LTV) ratio is the amount a borrower can borrow from a lender compared to the appraised value of the property that he or she wants to buy. The LTV determines the amount of a down payment a borrower has to supply from his own pocket to invest in the property.

Loan-to-Value ratio = Mortgage amount ∕Appraised value of the property.

For example, if the lender offers a loan at a 90% loan-to-value ratio, the borrower must supply 10% of the total cost of the purchase. In a fix-n-flip loan the same is true, the lender that supplies up to 90% (for example) of the home purchase price, requires the borrower to provide the other 10% of the price.

The Coronavirus pandemic has changed things rapidly including the market value of homes, thus affecting the LTV ratios lenders depend on. Please call for the most up-to-date loan-to-value ratios on our loans for your upcoming projects. 512-213-2271

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If a borrower defaults on a home loan, which is more likely to happen if they do not have much of their own money in the home, the lender takes back the home and sells it to get back the money they lent. Market fluctuations can cause lenders to lose money if the value of a house goes down and the borrower defaults on the loan. The value of the home may be less the amount of the loan. The coronavirus pandemic may make home prices goes down, but that is not certain and may not be true in all locations.


If the borrower had equity in the home and defaults, then the borrower loses the equity they have in the home because the lender takes the property and sells it to recoup their investment and expenses as quickly as possible.

Equity is the amount of money that would be returned to homeowner if the asset is liquidated (sold) and all debts are paid off. It is in a home owner’s best interest to sell a home before they default on a loan and pay the loan off if possible both so they can get their equity out of the home and so that they can keep their credit history in good shape.

FICO Score Requirements

The FICO score required on loans relates to the buyer’s credit history. It reflects how often they have been late or defaulted on loans in the past. Before the coronavirus pandemic set our lives, marketplace, and economy into a spin, REI Capital Resources required a FICO score of 650 on a hard money loan with a term of up to 24 months. Many people have lost their jobs and their credit scores have suffered. Watching the unemployment rate go up, lenders across the country have tightened up their FICO requirements and these requirements are changing daily. Please call me for our latest FICO requirements. 512-213-2271.

Selling to Avoid Foreclosure

Owners in default or facing default will sometimes take less than the market value for a house to avoid foreclosure. They may settle for only getting part of their equity back, reasoning that some is better than none. None is what they will get if they go into foreclosure and the lender takes back the property and sells it for the balance owed on the loan. The borrower may even give up all their equity to sell the house before defaulting to keep their credit history intact and their FICO scores high.

Buying Opportunity

The distressed homeowner’s situation becomes the buyer’s opportunity. The homeowner needs help to retain their high FICO score and some equity, and the fix-n-flip buyer needs to purchase a property for the lowest price. It can be a win-win deal.

As a direct lender, it is my job to help you get a purchase and rehab loan as quickly and as easily as possible. The perfect fit is still out there. Call me though for the most up-to-date information.

I am working online with the rest of you. If you need funding, fill out the BLN application at   http://reicapital.blnsoftware.com/ or send me an e-mail or give me a call.

Patrick St.Cin

W – 512-213-2271

M – 505-239-3026



Depreciation: Causes of the Fall?

What Can Make Real Estate Depreciate?

Depreciation is a decrease in the value of an asset overtime. When doing your due diligence research before making an investment in real estate, be sure to look around and consider those lurking circumstances that might decrease a property’s value.  

Although location affects the value of property most because real estate is by its nature real and tangible, supply is also a critical factor in how real estate is valued.


Overabundance means there is more of an item or resource than is needed or can be afforded by buyers, so it’s value goes down because no one buys it at the current price. The value will continue to go down until it reaches a point where buyers decide it is worth the price to store, use, and maintain the asset until the value goes up again. One example of this is the overabundance of condos that were launched in Miami right as demand fell because of a shortage of foreign buyers that was reported in the wsj article, “In Miami, There Are too Many Condos and Not Enough Foreign Buyers,” by Candace Taylor.


New businesses and a new reputation may also impact the value of properties. For example a related article in the wsj reported recently that visitors to Miami’s South Beach has doubled in 10 years. The article “Wealthy Buyers Say So Long to South Beach,” by Candace Taylor, points out that the construction of new hotels on Miami Beach has made it a hot spot for spring breakers and the masses of students who come to party but not to buy has caused traffic congestion, litter, loud parties, and more danger in the neighborhood. As a result, the properties are not so attractive to wealthier buyers and the prices of upscale condo sales have tumbled in the first quarter of 2019.

Other natural changes near a property can affect its value. Some obvious ones are wildfires, sink holes, and earth quakes. Another is global warming. One reason Miami beach prices are falling according the same wsj article by Taylor is because of fears that sea levels will rise. Homes and condos at lower elevations have lost some value because of these fears.

Neglect and Lack of Maintenance

Abandoned homes tend to lose value because they are not lived in or cared for. They slowly fall into disrepair.

Global Investors

The value of houses can also go down because of events that affect buyers from other parts of the world.  The wsj article mentioned previously explains that severe economic and civil disruption caused by socialist and totalitarian regimes in countries like Venezuela, Argentina, and Brazil can affect the ability of their once-wealthy citizens to purchase property abroad as the value of their currency falls compared to the dollar.

In the commercial real estate arena, as Jeff Levin pointed out in the Forbes Community Voice, trade wars between the United States and China has reduced funding for new building projects because China is decreasing its investments in U.S. commercial real estate and selling its assets, which brings down prices.

Competition for inexpensive properties to invest in and improve or to rent out for income is usually pretty stiff. As a broker and a direct lender, it is my job to help you get a hard money loan easily and quickly. Private Lenders, not banks, are willing to help you fund your project based on the value of the property and its after renovation value. We have money to lend and you need money quickly. A perfect fit is out there.

Give me a call or send an e-mail to the contacts below.

Patrick StCin, 512-213-2271

e-mail: patrick@REICapital.cash

Appreciation: Causes of the Rise?

What Can Make Real Estate Appreciate?

Appreciation is an increase in the value of an asset overtime. Depreciation is the opposite, a decrease in the value of the asset overtime. When doing your due diligence research before making an investment in real estate, be sure to look around and consider those circumstances that increase a property’s value. Tomorrow, we will talk about those circumstances that might cause a property to depreciate. 

Engraved in every real estate investor’s memory is the fact that location affects the value of the property most because real estate is by its nature real and tangible, a building, land, flora, fauna, and natural resources.

Using our imaginations and our memory, let’s review several things that can increase the value of an asset


Scarcity means there is a limited amount of some item or resource, so it becomes harder to find and worth more when you do find it due to competition for the limited resource. One example of a shortage creating a rise in value is the situation with single-family starter homes in the United States and the world. Although lower in price, single-family starter homes have become more valuable because there are not enough of them.   


Some changes in a vicinity that increase home values may not be due to a physical change nearby, for example the employment rate goes up, the local economy improves, and/or the crime rates go down. These changes may be due to a new business coming in, but also may be due to regulatory changes that lower taxes or technological changes that allow people to work at home.

A physical change near the property can affect its value. Sometimes the value of a house goes up because of something that moves into the neighborhood or nearby, for example a water park or amenity that brings tourism or a research facility or fulfillment center that brings jobs and workers. Sometimes something that was there all along is discovered or becomes more appreciated than it was before, for example mountains and foothills with a view or the solace of desert spaces. Sometimes, a land use regulation may change causing a mini land rush.

Photo by Alexander Wendt on Pexels.com


Development causes appreciation of houses. Let’s say that you buy bare land on the edge of a community and build on it. The value of the property will appreciate at least the value of the house.  If you buy in what is already known as the best district, you will most likely pay a premium price for that reputation and it will not go up over time because it is at the top already. If you buy in a place with a poorer reputation, such as a school district, and better management, government programs, or community involvement begins to improve the school district’s reputation, the homes in the area will likely appreciate.

Additions or Updates

Additions, enlargements, or updates of a home itself will appreciate its value depending on what is added and the quality of the materials and workmanship. These additions to quality might include finishing the basement, adding a screened-in porch, updating the bathroom or kitchen.

Global Investors

The value of houses can also go up because of things that happen in another part of the world that affects buyers or sellers.  Economic disruption or lack of opportunity in one country can cause people to invest in another country and move there, increasing the value of the property in that area. Wars and trade wars can also affect property value in a global economy. The wsj explains in a recent article that after housing prices fell in the United States, Latin Americans bought up luxury homes and condos in Miami.

Tomorrow, we will talk about what circumstances might make a property depreciate.

Competition for inexpensive properties to invest in and improve is usually pretty stiff. As a broker and a direct lender, it is my job to help you get a hard money loan easily and quickly. Private Lenders, not banks, are willing to help you fund your project based on the value of the property and its after renovation value. We have money to lend and you need money quickly. A perfect fit is out there.

Give me a call or send an e-mail to the contacts below.

Patrick StCin, 512-213-2271

e-mail: patrick@REICapital.cash

It’s Real: Multi-Family Property Investing

As the stock market quivers and stock market investors peer into the fog of the future trying to see where stocks, the economy, and earnings are going, up, down, or sidewise, real estate stands firm, on a block, in a neighborhood, around the corner from this or that, providing shelter to human beings. It might be old or new, trendy or dilapidated, occupied or abandoned, but it is real and panics are not going to move it, even if fire, earthquake, wind, or water might. Housing is still a basic need and if an investment fills a basic need, it is a safer investment.

An investment is not safe though if you do not do your research and match the facts of the property and area situation with your needs, expectations, and goals. When considering investing in multi-family properties, be sure to pay close attention to the quality of property management and to the location. This might be a good time to refresh your memory on investor shorthand for communicating with each other on property types. It really kind of easy, like: A, B, C, and D.

The letter grades are assigned based on property characteristics like, age, tenant income level, growth areas, appreciation, amenities, and rental rates according to ApartmentVestors.com. The grade isn’t there to scare you away from a certain property because it receives a low grade. (Although D areas in dangerous neighborhoods are not investments to be taken lightly or by beginners.) The property grade is there to help you set realistic goals for your investment and to communicate within the industry about what you are looking for.

Multi – Family Property Class A. Class A properties are newer, built in the last 15 years and have the most amenities, lowest vacancies, demand highest rents, and have less maintenance costs. These properties are above average in terms of design, construction, and finish; the tenants make above-average incomes, they are in desirable locations and they are accessible. These apartments are professionally managed by national or large regional management companies.

Investment sense: These buildings have the most appreciation potential but less cash flow starting out. Professionally managed and in desirable areas.

Multi – Family Property Class B

Class B properties were built in the last 15 to 30 years and have some amenities. The rents are average, a bit lower than Class A buildings. Tenants are usually a mix of corporate workers and skilled trades people. These apartments are in desirable places but do not have the design and finish reflective of the latest standards and preferences. The construction is adequate, and the buildings are generally well maintained by national or regional management companies; unit sizes are usually larger than current standards. These buildings have some appreciation potential and decent cash flow rates.

Investment sense: These buildings have the good appreciation potential and more cash flow than Class A. Professionally managed and in desirable areas.

Multi – Family Property Class C

Class C properties are older, built more than 30 years ago. They have fewer amenities, if any. The tenants are mostly service employees and you might have some government-subsidized tenants. Rents are below average, lower than Class B rents, and the occupancy rate is lower. These apartments provide functional housing, exhibit some level of deferred maintenance, are usually located in less desirable areas, and are generally managed by smaller, local property management companies and private investment groups. Cash flow is high, but appreciation is much lower than Class A or B apartments.

Investment sense: These buildings have the little appreciation potential, but cash flow is high. Property management varies because it is local and performed by smaller companies. It might be great, quirky, or terrible. Be sure to check. The location is less desirable but still safe.

Multi – Family Property Class D

Class D apartments are in challenging neighborhoods and potentially dangerous areas. They are older buildings, with no amenities, and high deferred maintenance. The tenants can be challenging, and management is intensive. Cash flow is reduced by lack of payment by tenants and repairs.

Investment sense: These buildings have no appreciation potential and cash flow is reduced. Property management varies because it is local and performed by smaller companies or it might not be performed at all. Be sure to look around carefully. The location could be dangerous, and it might be hard to attract tenants to the area.

Property and Area

When you are looking at buildings and the areas they are built in, apartmentvestors.com recommends that you pick a property in an area that has a higher class rating than the property. The area classes, like the property classes are A, B, C, and D. With A being a growth area, B being an older stable area, C being an older declining area, and D being older and declining, potentially rapidly declining area.

Apartmentvestors.com offers a strategy that suggests it is better to pick a D house in an A area because the area will have more influence over the stability of your investment over time. I would call this the domain of the fix-n-flip investor. As the deep urban areas or warehouse districts become more appealing to working professionals, a building that was once a C property in a D area might become a D property in an A area and be well worth renovating. But you need to be sure the area classification is really changing.

If you are a hands-off straightforward investor, not a fix-n-flipper, you might want to look only at the A and B properties in the A and B areas if you are taking a long-term approach and interested in appreciation in value. However, you might be more interested in cash flow. Then you might want to look at B and C properties in B, or C areas.

That is a lot of alphabet flying around.

If you have a multi-family property in mind and are ready to start negotiating or are ready to buy, send me an e-mail or give me a call and I can help the funding.

Pat St. Cin



Austin, Texas



References: apartmentvestors.com

A Tangible Asset

A tangible asset is one that is capable of being appraised at a particular value. It can be touched. It can be identified. It is real. There is no guesswork about it. Hard money loans are based on the value of the asset or property used for collateral.

The stock market is impossible to control. If you read Investopedia or the Wall Street Journal, you know already that It will soar and dive and stall. However, it is just one option for an investment. Real estate is another choice you can make. Real estate would put some diversity into your investment portfolio. However, it takes a little more hands-on work and patience. In the stock market, all you do is decide how much you want to invest and put your money down and sell when you are ready.

In real estate, you have more choices to make. You decide how much time you want to invest as well as how much money. You should of course do the research upfront yourself and find a great real estate agent to work with, but you can choose the location of the property, pick the quality of the house or apartment complex, do the remodel yourself if you have the skills, find the occupants for a rental through internet advertising, and/or manage the rental yourself by collecting rents and providing landlord services.

A rental produces cash flow even in an economic downturn. In fact, in economic downturns, it might give you more income as people may have to rent instead of buy and occupancy rises. A rental property also builds equity. On the other hand, real estate takes longer to sell than stock and income requires occupants. There are also taxes, insurance, and utilities to pay whether the property is occupied or not.

If you are looking at buying real estate as an investment option, to add diversity to your basket of investment eggs, you need to do your due diligence assessments and be ready for competition. It would be a good idea to get prequalified for a loan so you can have the money on hand fast if you find a property you want to invest in.



Ask yourself:

How much money do I need?

How much collateral can I offer a lender?

How much will the repairs cost?

How long will the repairs take?

Add a 15 % cushion

As a broker, I would be happy to talk over the options with you and can help you find a funding source for a fee. I give advice, do the paperwork, and make the phones calls involved in the transaction. I have contacts and experience in bringing lenders and borrowers together. I’ll help you find the best rates and pass the completed loan package on the lender.

I would love to give you a hand.

Follow this link for a quick prequalification form:


Or, please call or e-mail.

Pat St. Cin



Austin, Texas