Culby Culbertson, founder of Culbertson Holdings and a capital markets broker with close to $550 million in closed loans since late 2018, says the biggest problem in today's lending market is not high interest rates but borrowers' outdated mindset. Many still compare current rates to the historic lows of 2021, which he calls an anomaly that never existed before. "The biggest misconception is that the rates we once saw in 2021 are something we’re supposed to hold onto," Culbertson said. "If you look historically, those rates never existed in our lifetime, not even our grandparents’ lifetime."
Culbertson uses a simple analogy: capital should be treated like a hammer—a tool for a specific task. You pick it up, do the work, and return it. The cost of borrowing has always been part of the equation, and investors who forget that struggle. Beyond rates, he highlights a second misconception: that lending is readily available. Banks have pulled back on leverage, typically offering 70% loan-to-value, with strong borrowers reaching 75%. The 80% leverage common in the prior cycle is largely gone. "Banks have de-risked their credit profile," he said. "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."
This creates opportunity for borrowers who adapt. With sellers anchored to prior cycle prices and buyers disciplined, the bid-ask gap is closing. Culbertson sees the market approaching equilibrium, not distress. For underwriting, fundamentals must hold: cap rate must clear cost of capital, and metrics like debt yield, yield on cost, and debt service coverage ratios must be in range. "You can’t buy into the future when it comes to rates," he said. "If you’re buying a stabilized operation at a higher price on the expectation that rates drop, that is not a good business decision."
Winning borrowers are those who stop waiting for a return to 2021 conditions and build deals around today's market. That means tighter equity, creative capital stacks, and clear-eyed property performance at current rates. Tools like preferred equity, mezzanine debt, seller carry, and bridge products exist to help close deals. Borrowers who understand how and when to use them are moving capital off the sidelines.
