Loan-to-Cost (LTC): What It Means in Real Estate Finance
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Key terms
- REIT (Real Estate Investment Trust)A company that owns, operates, or finances income-producing real estate. Allows investors to earn real estate income without buying property directly. Must pay 90% of income as dividends.
- Real Estate SyndicationA partnership structure where multiple investors pool capital to purchase larger properties than they could afford individually. A sponsor or general partner manages the investment while limited partners provide capital and receive passive income distributions.
- Loan-to-Value Ratio (LTV)The ratio of a loan amount to the appraised value of the property, expressed as a percentage. Lower LTV ratios typically result in better loan terms and may avoid PMI requirements.
- Dollar-Cost AveragingAn investment strategy where you invest a fixed amount regularly, regardless of market conditions. Reduces the impact of market volatility by buying more shares when prices are low.
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