The Discipline of Conservative Underwriting — Why Loan-to-Value Ratios Are Important, Part 2 of 3 

This is the second article in a three-part series on the unique value of bridge lending and participating in this income stream as a private lender. In Part 1, we covered the full spectrum of real estate investment structures and why debt-based strategies, such as short-term bridge lending, complement the equity positions most investors already hold. Here, we go inside Bridger’s underwriting process — why loan to value (LTV) matters, what we look for in a borrower and property, and how to spot the red flags that should give any investor pause. 

Toeing the LTV Line 

When people ask how we think about loan-to-value, I’ll be straightforward: there’s no single magic number or complex mathematical formula behind it. What there is, however, is decades of experience watching what happens to lenders — and their investors — when the margin for error gets thin. We underwrite to a meaningful equity cushion so that market corrections, property-type volatility, and the unexpected complications that arise over the life of a loan can be absorbed without impairing principal. In practice, our portfolio has typically been positioned well inside our stated parameters, reflecting a conservative posture that’s applied consistently across cycles. 

Compare that to programs lending at materially higher LTVs (70% LTV+). At those levels, a relatively modest market retreat can put principal at risk much sooner. In specific submarkets or property types — retail or office in a softening economy, for example — values can move faster than most investors anticipate, and a highly leveraged structure leaves little room to maneuver. Our approach is different: we prioritize time, diligence, and documentation, and we structure loans so the equity behind us is real and durable. While we have executed transactions above our typical targets when the sponsorship, asset quality, and structure warranted it, we do so selectively and only when the downside is clearly protected. 

How We Underwrite 

Our process begins long before a loan committee convenes. The moment a deal comes in, I’m asking three things: What’s the loan amount? Where is the property located? And when does the borrower need to close? Those three questions tell us immediately whether a deal fits within our parameters. From there, it’s a ground-up review of everything that matters: 

• Where is the property located and in what submarket? Is it a core California market, suburban location or tertiary market 

• Is there income on the property? What is the debt coverage ratio? What is the loan -on a price per-square-foot basis 

• The borrower’s global financial picture — do we have experience with the borrower? What is their CRE resume?  Review SREO and personal financial statements and credit history.  Determine if we need to review tax returns. 

• A broker’s opinion of value from an expert in that specific submarket or an appraisal.  We often call other knowledge brokers or sponsors that know the market to get their opinion on values  

• Exit strategies, both the borrower’s and ours — stabilization, refinance, sale, or takeout by a conventional lender.  How would Slatt Capital look to refinance the borrower even if not a Slatt client? 

Geography is an extremely important factor in our underwriting. Properties closer to core markets like the Bay Area hold value better during corrections. The further you move into tertiary or rural markets, the more amplified the downside becomes. In those cases, we’ll tighten our threshold further — sometimes to less than 50% — to compensate for the added risk. 

What We Won’t Touch 

There are certain deals we simply pass on. Some are about the asset, some are about the borrower: 

• Environmentally contaminated properties, or any collateral adjacent to a known plume or spill 

• Raw, unentitled land — the first asset class to lose value in a market correction 

• Properties in fire-prone rural corridors where insurance is costly, complex, and uncertain 

• Second and third deed positions — if a first trust deed goes into default, seconds and thirds can be wiped out before they have any meaningful recourse 

• Known problem borrowers — even a well-structured loan at 50% LTV isn’t worth the legal exposure if the person on the other side has a history of missed payments or underperforming assets they can’t explain 

Red Flags to Watch For 

If you’re evaluating any bridge lending program — not just ours — these are the structural characteristics that should give you pause: 

• Foreclosures or REO properties on the books 

• A fund leveraged against its own note values 

• Large individual loans that represent a disproportionate share of the total portfolio 

• Lack of diversity in the product types or geographic locations. Do not want significant concentrations in either component of the fund. 

• A manager collecting both origination points and a management fee with no clear fiduciary standard 

• Less conservative lending parameters such as higher LTV policy in the fund documents 

• Loans in second or third lien position mixed into what’s marketed as a conservative program 

• Is the lender positioned as a relationship lender vs transactional? 

The question I always come back to is simple: if this property loses value, at what point does our loan become impaired? When a loan is sized with a substantial equity cushion, that answer gives us comfort. When leverage is stretched, it doesn’t. Conservative underwriting isn’t about leaving money on the table — it’s about ensuring our investors’ principal is protected across every market cycle, not just the good ones. 

The Bottom Line 

Conservative underwriting is not a limitation — it’s a competitive advantage. By maintaining disciplined leverage targets, relying on a loan committee with approximately 100 years of combined experience, and never compromising on borrower quality or asset fundamentals, we’ve built a portfolio that has delivered consistent returns to investors across every market condition without a single foreclosure. The discipline we apply to every deal is the same discipline that protects every dollar our investors have entrusted to us. 

Coming Up in Part 3 

We’ll cover the true benefit of bridge lending — earning a real return without the work, and making your capital work harder in the time between.