Private money lenders assess risk using various criteria, including LTV ratios. LTV represents the percentage of a property’s current value they’re willing to lend. For instance, with a 65% LTV on a $100,000 property, the lender may lend up to $65,000. Higher LTVs pose greater risk.
Some lenders use After Repair Value (ARV), factoring in future value after renovations, influencing loan amounts and terms. Know your lender’s approach to make informed investment decisions.