Helpful resources for Texas commercial real estate borrowers and investors.
Download fillable PDF applications for hard money, stated income, 30-year fixed, and working capital loans.
Current rate sheets for all Texas commercial loan programs. Updated regularly.
SBA, hard money, DSCR, stated income, cash-out refi, and 30-year fixed commercial loans in Texas.
30+ key terms every commercial real estate borrower and investor should know — from NOI to DSCR to cap rate. Click any term for a plain-English explanation.
Annual rental income minus all operating expenses — but before mortgage payments, depreciation, and income taxes. NOI is the single most important number in commercial real estate underwriting. It's what the property earns, independent of how it's financed.
Cap rate converts a property's NOI into a value. Divide NOI by the cap rate to get value. Lower cap rate = higher price relative to income (used in stronger markets). Higher cap rate = more income relative to price (used in secondary markets or distressed assets). Cap rates are market-driven — no formula sets them.
Measures how well a property's income covers its mortgage payment. 1.0x = break-even (income exactly equals debt payment). 1.25x = 25% cushion above the payment. Most commercial lenders require 1.20x–1.25x minimum. DSCR loans use this ratio as the primary qualifying metric instead of borrower income.
The loan amount expressed as a percentage of the property's appraised value. 75% LTV on a $400K property = $300K loan. LTV determines how much equity the borrower must contribute. Lower LTV = more equity cushion = lower risk for lender = potentially lower rate. Commercial DSCR loans typically max at 75–80% LTV.
Used in construction and value-add lending. The loan amount as a percentage of the total project cost (land + construction/rehab). Different from LTV, which uses appraised value. Most construction lenders will lend 75–80% LTC. At 75% LTC on a $500K project, the loan is $375K and you contribute $125K.
The estimated market value of a property after all planned renovations are complete. Used heavily in hard money lending and fix-and-flip underwriting. Lenders typically lend based on purchase price LTV, not ARV — but ARV determines whether the deal makes sense and how much equity will be created by the rehab.
Annual pre-tax cash flow divided by total cash invested. The real-world return on your out-of-pocket investment after paying the mortgage. Different from cap rate (which ignores financing). A 6% cap rate property with 75% LTV at today's rates might yield only 2–4% cash-on-cash — or even negative. CoC is what actually lands in your account.
A quick screening metric: property price divided by annual gross rent. Lower GRM = more rent relative to price = better income deal. Useful for rapidly comparing deals in the same market but not a substitute for full underwriting — it ignores expenses, vacancy, and debt service completely.
A loan where payments cover only the interest owed — no principal is paid down during the IO period. Common in bridge loans, hard money, and commercial deals where the investor plans to sell or refinance before the loan converts to amortizing. IO maximizes cash flow during the hold period but leaves the full principal balance due at maturity.
A large lump-sum payment due at the end of a loan term — often the entire remaining principal. Commercial loans frequently have a 5-year or 10-year balloon on a 25–30 year amortization schedule. This forces a refinance or sale at maturity. Know your balloon date and have your exit strategy in place 12–18 months before it hits.
Title is legal ownership of a property. "Clear title" means no undisclosed liens, judgments, or ownership disputes cloud the property. Title insurance protects lenders and buyers from title defects discovered after closing. In Texas, title insurance rates are set by the state — the premium is the same regardless of which title company you use, so shop for service quality.
An IRS provision allowing investors to defer capital gains taxes by rolling proceeds from one investment property sale directly into the purchase of another "like-kind" property. Rules: identify replacement property within 45 days of closing; close within 180 days; use a qualified intermediary to hold funds. Can be repeated indefinitely — some investors never pay capital gains tax in their lifetime.
The expected percentage of potential rent lost to vacant units and uncollected rent. Lenders apply a standard vacancy factor (typically 5–10% for residential, 10–15% for commercial) when underwriting — even if the property is 100% occupied today. This is the difference between "potential gross income" and "effective gross income."
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