LESSON 5

Good, OK, and Bad: Reading Real Term Sheets

Same property, same purchase price, radically different risk profiles. Here's how the three term sheets compare:

THE GOOD

  • LTV75%
  • DSCR1.35
  • RecourseNon-recourse
  • Term5 years + 2 ext
  • Rate Lock30 days

Equity cushion, cash flow margin, personal asset protection, time flexibility.

THE OKAY

  • LTV80%
  • DSCR1.20
  • RecoursePartial (25%)
  • Term3 years + 1 ext
  • Rate Lock14 days

Workable, but tighter. Less room for error on every dimension.

THE BAD

  • LTV85%
  • DSCR1.10
  • RecourseFull recourse
  • Term2 years, no ext
  • Rate LockNone

Designed for the lender to win and you to lose.

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