Posted by richard norton on February 18, 2010 at 22:37:17:
In Reply to: Debt Yield posted by B. Hawkins on February 05, 2010 at 15:07:19:
Hi,
As a private lender there are 5 things I look at to qualify a deal...
1. current NOI we structure deals 75% LTV of current NOI
2. projected NOI...I don't take this too seriously it just gives an idea of what "could happen" in a perfect word...is the world perfect? no...
3. current capital stack
4. sources and uses ....what will you do with the money
5. exit strategy
every deal is different ie: one size does not fit all and will not look the same going out as coming in...
there are many ways to slice and dice a deal to create "true value" which is what I look for...
unfortunately most bankers live in a vanilla world where everything most fit a mold...
which is why we are in the market we are in (good for me bad for them)
in this market the only smart thing in my opinion to do is
a. provide bridge financing
b. restructure capital stack to create value (buy down the debt)
c. identify other key events (improvements etc.)to create value...in others words you can't leverage credit these days to create value it has got to be "true value" based on current NOI
bottom line I'm looking to create a yield of 12-14% based on the above...
like you said there are many ways to say the same thing...
anyway that's my take I hope it helps...
if we can be of further assistance please look me up @
http://www.windfallprivatefunding.com
cheers
Richard