Do you need funds to build a house on a development property that you plan to sell? Perhaps you want to get into real estate as a business with a multifamily property where you live in one unit and rent out the others.

When applying for a commercial loan, hard money lenders may use the loan-to-cost ratio or the loan-to-value ratio during the underwriting process to determine the risk associated with the loan.

Sometimes, commercial property owners run into difficulty. When that happens, the lender has a decision to make: Foreclose early – potentially forcing the borrower into bankruptcy – or work with the borrower to get the loan back on track. 

According to SBA (Small Business Administration) stats published in 2019, around 20% of business startups fail in the first year.

Once you've found the right property, getting the financing you need to make the deal happen can be a significant hurdle for someone with hopes of investing in commercial real estate.

Investing in real estate can be a lucrative business as long as you take the right steps in your investment strategy.

Every investor has to strike a balance between risk and reward. It’s not a one-to-one equation — different investment vehicles attack this problem in different ways.