Introduction
Securing financing is one of the most important steps in any real estate investment journey. Whether you’re acquiring your first property or expanding a growing portfolio, understanding how lenders evaluate risk can help you secure better terms and increase your long-term returns.
At Kenbry Capital, we believe that smart investors are informed investors — and the right financial insights can make all the difference. Here are five key loan tips every investor should know before their next deal.
1. Know Your Loan-to-Value (LTV) Ratio
Your Loan-to-Value (LTV) ratio measures how much you’re borrowing compared to the property’s appraised value.
Lenders use this ratio to assess risk — the higher your LTV, the riskier the loan appears.
A lower LTV can lead to better terms, lower interest rates, and increased approval odds.
Example:
If a property is valued at $500,000 and you borrow $350,000, your LTV is 70%.
Keeping this ratio in check signals to lenders that you’re a responsible investor with equity in the game.
2. Always Calculate Your DSCR
Your Debt Service Coverage Ratio (DSCR) measures your property’s ability to generate enough income to cover its debt payments.
A strong DSCR reassures lenders that your property can sustain its own financing without additional support.
In simple terms:
A DSCR above 1.25 is typically viewed as favorable — it means your rental income exceeds your loan obligations by 25%.
Higher DSCRs often mean smoother approvals and more competitive loan options.
3. Choose the Right Loan Type
The right financing structure depends on your investment goals and timeline.
- Fixed-rate loans offer stability — great for investors who prefer predictable monthly payments and long-term holds.
- Adjustable-rate loans (ARMs) provide flexibility — ideal for short-term investors or those anticipating rate changes or property appreciation.
At Kenbry, we work with investors to structure loans that align with both short-term strategy and long-term growth.
4. Keep Cash Reserves
Cash reserves demonstrate financial strength and stability.
Lenders want to see that you can handle unexpected expenses — such as repairs, vacancies, or rising interest costs — without jeopardizing your loan.
Maintaining reserves shows lenders that you’re prepared and disciplined, which can significantly improve your overall creditworthiness and negotiation leverage.
5. Build Strong Relationships
Real estate investing isn’t just about numbers — it’s also about trust and relationships.
Building rapport with lenders, brokers, and financial partners can open doors to better terms, faster approvals, and access to exclusive opportunities.
When lenders trust your track record and communication, they’re more willing to provide flexible solutions to support your investment growth.
Conclusion
Smart investing starts with understanding how lenders think.
By mastering your LTV, DSCR, loan structures, and cash management — and nurturing lasting relationships — you position yourself for stronger deals and greater returns.
At Kenbry Capital, we’re committed to helping investors make informed, strategic financing decisions. Because when you know how to leverage your loans, every deal becomes a stepping stone toward lasting success.