Comparing Two Investor Lenders: Which Lines Have to Line Up

Two lenders quote eighty percent. One means eighty percent of the purchase price, the other eighty percent of the as-is appraised value, and on the same house those are different amounts of money. A second quote is an alternative to the first only when the lines underneath the headline number describe the same thing.

The lender directory records what each lender publishes and the date each figure was verified, and a compare page sets two of them side by side. Neither can tell you whether the two offers on your desk are comparable — that depends on which basis each one quoted. These are the lines to line up.

Leverage is a percentage of something

Three denominators are in common use and they are not interchangeable. Loan-to-value divides the loan by a property value. Loan-to-cost divides it by what the project costs you, usually purchase price plus rehab budget. A percentage of after-repair value divides it by what the property is expected to be worth finished. A purchase adds a fourth wrinkle: many lenders apply their percentage to the lower of contract price and appraised value, which turns a cheap buy into a smaller loan rather than a bigger one.

Take round numbers chosen for arithmetic, not market data. A house under contract at 200,000, appraised as-is at 220,000, with a 40,000 rehab and a 300,000 after-repair value. Eighty percent of the lower of price and value is 160,000. Eighty-five percent of the 240,000 total cost is 204,000, though not all of it arrives at closing. Seventy percent of the after-repair value is 210,000, and whether a separate purchase-price cap applies is a second question. One deal, three answers, before anyone mentions a rate.

So the first question to each lender is which denominator the percentage sits on, whether a lower-of rule applies, and which appraisal figure they will use — the as-is or the subject-to-completion value. The maximum-leverage purchase page covers where the ceiling usually lands on a rental.

The comparable is cash to close, not a percentage

Convert both offers into one number: what leaves your account on closing day. That is the down payment implied by the leverage, plus origination points, plus the lender's own fees, plus third-party costs, plus any reserve or interest reserve the lender holds back. A lower rate bought with higher points costs more at the table and less over a long hold, so the right comparison depends on how long you intend to own the loan.

Points and fees are different lines, negotiated differently; the origination fee page covers which is which, and buying down the rate covers the trade in the other direction. Costs that have nothing to do with the lender still change the total — the transfer tax page is where those land.

Rehab money: the same total, different timing

On a project loan the rehab budget is usually a holdback, not cash at closing. The lender funds the purchase piece, then releases the rehab piece in draws against work already done. Two offers with identical totals can leave very different amounts of your own money tied up at any one moment, which decides whether you can run a second project at the same time.

Ask how many draws are included, what each extra one costs, whether a draw needs an on-site inspection, how long the release takes, and whether any of the rehab arrives at closing. Ask the same question about the end: a holdback that is still unreleased when the loan matures is an exposed balance. The BRRRR calculator is where the holdback timing shows up against your own cash.

A rate belongs to a term and a structure

A quoted rate means little without three facts beside it: whether it is fixed for the whole term or floats over an index, whether payments are interest-only or amortising, and how long the term runs. A fixed rate for twelve months and a floating rate over a thirty-year term are not two versions of one product.

Then ask what maturity looks like. How many extensions exist, what each costs, and what has to be true to get one. A short loan with cheap extensions and a short loan with none are different risks on the same page, and the maturing balloon page covers the position you are in if the refinance is late. For the amortising-versus-interest-only choice on a rental, see the comparison; for a floating rate, the rate cap calculator prices the hedge.

Recourse, guaranty and who signs

Ask whether the loan is recourse, who signs the personal guaranty, and whether the borrower has to be an entity at all. Some programmes lend only to an LLC, some lend to an individual, and some accept either with different pricing. A multi-member LLC raises a further question about which members must sign. These answers change who is exposed if the project goes wrong, so the cheaper offer on paper can be the more expensive one to sign.

The entity purchase page covers the paperwork that follows, and vesting covers how title and the loan have to agree.

The exit has a price too

Two things govern what it costs to leave. A prepayment penalty sets what you pay to retire the loan early, and its shape matters as much as its size — a declining penalty and a flat one behave differently against a sale in month eight. A seasoning requirement sets how long the property must be held, or the loan carried, before the next lender will refinance it.

Those two interact. If the plan is to refinance into long-term debt, the incoming lender's seasoning rule and the outgoing lender's penalty both govern the exit, and a mismatch is paid for in months of a more expensive loan. The six-month seasoning page sets out that sequence.

Who you are actually talking to

The name on the quote is not always the party making the credit decision. Some lenders originate and hold their own loans, some fund at the table and sell immediately, and some quotes come from a broker placing the file with whichever of several lenders fits. That changes two practical things: who can say yes to an exception, and who you call when a draw stalls.

Ask plainly: are you lending your own capital on this file, or placing it. The directory records a channel for some lenders, and the vocabulary sits in hard money and asset-based lending. Where a lender has been acquired or stopped originating, the brand on the quote and the party behind it can differ; that case has its own post.

Putting it on one page

Published criteria move, which is why every figure in the directory carries the date it was verified. Read both lender pages, then the pair view if one exists, then run the eight lines against both quotes. A line a lender publishes nothing on is the line to ask about first.