From the desk of Massey Kouhssari - Creative Funding

Post date: Feb 14, 2012 8:9:18 PM

As you all know, sometimes we have to be creative to get loans done in this market. One of the most critical aspects of any loan is the Loan to Value ratio, and there are often options for reducing the LTV to make the deal more attractive.

For purchases, the seller carry back is a great strategy. We all know that it is a buyer’s market, so a motivated seller is going to have to really entice those buyers. In some instances, the seller will simply accept that the market demands a lower price. And under the right circumstances, the seller could be willing to carry back 20% or more of the purchase price as a note in 2nd position. This opens up a lot more financing options.

Sometimes if a deal is close, but just a little high on the LTV, brokers will allow us to hold their fees in one of our client trust accounts until certain conditions are met. With riskier development loans, it can make a big difference to the lender if that LTV is a few points lower. By carrying fees in this manner, it gives the lender additional security if the deal goes bad. If the broker is confident in the project, and has the ability to hold off on those fees, it can sometimes make the difference between a pass and an approval to fund. 

Another option is to cross collateralize an additional property. If the borrower is able, putting up an additional property can potentially lower the LTV. At the very least, it will add security to the loan, and show the lender an increased level of commitment by putting more skin in the game.   

If you would like to discuss private money loans further or run a particular scenario by us, contact Massey via e-mail at Otherwise, if you would like to get a better feel for our company and the types of programs we do, please browse our web site at

Thank you,