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What Most Borrowers Still Get Wrong About Today's Lending Market
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Date:
20 Apr 2026
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Rates are not the problem. The problem is that too many borrowers are still thinking about rates the way they did in 2021, and that mindset is creating friction in deals that should be getting done.
Culby Culbertson, founder of Culbertson Holdings and a capital markets broker with close to $550 million in closed loans since late 2018, has watched the market cycle through some genuinely unusual conditions. The low rate environment that followed COVID was not a new normal. It was an anomaly, and the sooner borrowers accept that, the more clearly they can underwrite deals in the market that actually exists.
“The biggest misconception is that the rates we once saw in 2021 are something we’re supposed to hold onto,” Culbertson says. “If you look historically, those rates never existed in our lifetime, not even our grandparents’ lifetime.”
He uses a simple analogy to explain how capital should be treated. A hammer is a useful tool for a specific purpose. You pick it up, you do the work, and you put it back. Capital works the same way. It is not something you carry around indefinitely. You deploy it with purpose for a defined task, and you return it at a cost. The investors who are struggling right now are the ones who forgot that the cost was always part of the equation.
Beyond the rate conversation, Culbertson points to a second and equally important misconception: that lending is readily available to anyone who walks through the door. It is not. Banks have pulled back significantly on leverage, with most getting to around 70% loan-to-value, and borrowers with strong track records and clean presentations might reach 75%. The 80% leverage that was common in the prior cycle is largely gone.
“Banks have de-risked their credit profile,” he says. “Unless you’re taking a real step forward in how you’re presenting the utilization of those funds and your path to repayment, you have a very low likelihood of getting approved.”
That creates a real opportunity for borrowers who know how to work in the current environment. With sellers still anchored to prior cycle prices in many cases, and buyers becoming more disciplined about the numbers, the gap between bid and ask is slowly closing. Culbertson sees the market as approaching equilibrium, not collapsing into distress.
For buyers underwriting deals today, the math needs to hold up on its own fundamentals. A cap rate that clears your cost of capital is the starting point. From there, debt yield, yield on cost, and debt service coverage ratios all need to be within range before anyone should be making aggressive assumptions about where rates are headed.
“You can’t buy into the future when it comes to rates,” Culbertson says. “If you’re buying a stabilized operation at a higher price on the expectation that rates drop, that is not a good business decision.”
The borrowers who are winning right now are the ones who have stopped waiting for a return to conditions that are not coming back and started building deals around what the market actually offers. That means tighter equity requirements, more creative capital stacks when needed, and a clear-eyed view of how a property performs at today’s rates, not some projected future rate.
The tools are there. Preferred equity, mezzanine debt, seller carry structures, and bridge products all exist specifically to help investors close deals in a higher rate environment. The borrowers who understand how to use them, and when, are the ones moving capital off the sidelines and into assets.
About Culbertson Holdings
Culbertson Holdings is a Dallas-based capital markets advisory firm specializing in debt and equity placement for commercial and residential investment assets. With over $550 million in closed loans across more than 12 states, the team works across all core asset classes including multifamily, industrial, hospitality, retail, and land. Culbertson Holdings provides transaction advisory, creative deal structuring, and access to institutional and private capital sources for acquisitions, refinances, ground-up construction, land development, and value-add projects. To learn more or connect with the team, visit culbertsonholdings.com
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