A credible stabilization path. Lenders want a realistic plan supported by sponsor liquidity, operational controls, and a budget that anticipates surprises. Strong sponsorship plus a tight business plan can unlock better options.
Concessions and loss-to-lease reduce effective income, so lenders typically underwrite to net effective rents rather than asking rents. If concessions are rising, lenders may assume slower rent growth or higher economic vacancy.
Most lenders start with trailing financials and rent roll integrity—then validate cash flow quality through collections, concessions, and expense realism. Clean, consistent documentation often matters as much as the headline NOI.
Differences usually come from underwriting assumptions: vacancy and credit loss, market rent support, expense normalization, and insurance/tax stresses. Small changes in these inputs can materially change DSCR and proceeds.
Construction loans are underwritten on execution risk: sponsor track record, contractor strength, budget accuracy, contingency, and takeout/refinance plan. Stabilized loans are underwritten primarily on proven cash flow and durability.
