I've been reading that the income-producing piece matters a lot to them but a lot of these small surface lots have month-to-month tenants and no leases, so I'm not sure how a lender underwrites that compared to, say, a strip mall with signed leases.
Month-to-month revenue is the exact part I have never seen a hard money shop treat generously, no matter how many times a borrower swears the lot has been full every weekend for three years. What happens instead is they strip the income down to maybe 50 or 60 cents on the dollar and then underwrite the dirt underneath as if nobody was parking on it at all, which is pretty close to raw land treatment in the end. I closed an escrow on a surface lot in Riverside about 18 months ago where the lender came in at 55% LTV on the land value, ignored the attendant revenue entirely, and charged two points over what the borrower expected because there were no estoppels to produce. If you can get even one anchor tenant on a month-to-month converted to a 12-month with a right to renew, the conversation with the lender changes pretty fast, not dramatically but enough to move the LTV a few points and soften the rate.
Lender I used in 2022 haircut my NOI 40% because nothing was on paper.
Month-to-month without leases gets underwritten closer to raw land than income property in my experience, the lender mentally strips the revenue out and prices to the dirt. The one thing that saves you is if you can show 12 months of credit card or pay-station deposits hitting the same account consistently, because that paper trail can substitute for a signed lease in a lot of shops. Where it still bites people is the exit: your refi lender 18 months later will want actual leases, so you need a plan to convert at least your anchor monthly parkers to paper before you get there.
Most hard money lenders I have talked to care less about the lease structure than people think and more about the exit. If you cannot show them a clear refi path or sale comp within 12 to 18 months, the month-to-month thing becomes their excuse to price you into oblivion or just pass. The land value underneath is often what saves or kills the deal, especially on a small surface lot in a market where the highest and best use is something else entirely. Had a conversation last year about a 22-space lot in Akron, and the lender's first question was about zoning and redevelopment potential, not collections. Treat it like raw land with a cash flow bonus and you will pitch it more accurately than the income-only framing.
