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While private firms often go higher (to 3/4 e.g. - above 4/5 is known to be distinctly unsound and banks usually won't lend that far).

I don't own a rental home but i do own a fair amount of geometrical property and routinely can if I desire borrow 80% loan to value on the mortgage from commercial banks.

There are SBA loans out there (which I do not qualify for) that will loan 95% loan to value....but they have strict covenants. It all depends of the appraisal of course.

I also borrow from institutional firms like pensions and insurance companies and they routinely offer 80% loan to value of either the appraisal or verified cost whichever is lowest. They give nice amortizations though...25-35 or even 40 years.

If this guy used 3M in cash to buy 10M in residences, that doesn't seem like too much leveraging to me unless he overpaid. I would bet he is hoping for more property appreciation than a cash flow commercial developer-investor like myself. Equity is nice but you can't eat it. I generally sit at around 55% LTV but will take a temporary spike on an acquisition or new development to even 80% on that particular deal if I think cash flow will rise and decrease the LTV.

I have seen homebuilders and banks do incestuous deals with appraisers where by they routinely over appraise by 10-20% so folks can do no money down home purchases...in fact that is rather common. It is rather uncommon in commercial deals. The only things about REITs I'm familiar with are that they have been decent in the past few years, they often make passes at my properties but then want to do holdbacks and fees at the end...a waste of my time, and that they have to use their rents or pay them out as dividends.

Fits. Starting at 80 is common enough, but in a portfolio of properties, with some farther along in repayment and some appreciating in value. Starting higher than 80 is done to squeeze end consumers into larger homes. That is common. The reason it can be viable is the income of the buyer is the real security, not the house as collateral.

Often the bank requires private mortgage insurance on anything above 80, to protect themselves against overly aggressive "flippers" (who buy without equity to speak of, and default and give the collateral to the bank if the price doesn't go up, and sell to repay the loan if it does - exploiting the implicit "option" a loan with collateral contains).

On REITs, the rule is they have to pay out 95% of their net income as dividends. But not "their rents". Rents can cover expenses, debt service, and depreciation - as well as contribute to net income. In practice this basically means the ongoing acquisition budget of a REIT is set by its depreciation.

When they want to buy faster than that (which is often), they issue additional securities, whether stock or debt, or borrow further from banks, typically on revolving lines of credit. When they aren't buying actively the depreciation flow pays down the credit lines.

REITs have had quite a run. They were a great play in the late 90s at the end of the bubble, the perfect place to cash out to. They have run up so much recently that just buying them at random these days, you would wind up overpaying. There are better prices in the private market. The best run REITs can still make sense, when the price isn't outrageous. But you have to value them case by case - you can't count on the market keeping their stock price rational, these days.