What is a Asset based Loan??

What is a Asset based Loan??

Joel Roth Joel Roth

Joel Roth

Residential & Commercial Mortgage Loan Officer @ Landstone Capital Group #1840421 | NMLS #2322798

Published Nov 8, 2023
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Real estate asset-based lending is based almost exclusively on real estate assets used as collateral for financing. After receiving all of the financial documentation on the property, the lender will perform a cash flow analysis to determine the property’s viability as an asset. It will factor in the projected rental income and account for expenses such as property taxes, insurance and maintenance to arrive at a net cash flow. The analysis is used to determine the amount of loan, which can be as high as 70% loan-to-value (LTV). With most asset-based loans, the loan term ranges from one to five years, allowing enough time to prepare the property for resale or arrange for traditional refinancing.

Pro's

  • Loan qualification is asset-based, not credit-based.

  • Financing not dependent on personal or business asset.

  • Quick loan turnaround in a fast-moving market

Con's

  • Asset Risk.

  • Additional fees.

  • Certain assets may not qualify as collateral.

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