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How to Underwrite Investment Real Estate Loans (Part I of II)

Hooi Lim

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This is the first installment of a two-part series on this topic. It provides an overview of investment real estate (IRE) lending, including the typical IRE properties banks finance, purpose and borrowing causes, and prudent lending practices. In addition, it discusses the varying channels in the bank for IRE lending and key risks for the borrower and property. Throughout, the article focuses on net operating income (NOI), debt yield (DY), and capitalization rate, and provides a systematic a…

About the Author
Hooi Lim
former Senior Regional Credit Officer, Wells Fargo
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