Assume you identify an apartment project with the following parameters:

Total SF is 25,000 sf gross (20,000 leasable) and it has 25 units. Your construction costs are $182 psf, soft costs are 22% of hard costs, the site acquisition is $750,000, and the developer fee is 6% of all other costs.

Your project is funded with debt and equity where the debt has to meet the following parameters:

LTV = 80%, LTC = 90%, and DSCR = 1.25

Your two capital sources are debt and equity.

Your loan is priced at 7% interest on a 30-year amortization.

Assume a cap rate of 7.5% at completion and a cap rate of 7.5% at year 10.

Rent is expected to be $2,000 per month with a 5% vacancy, and operating expenses of $5,500 per unit per year. Rent escalation is 2% per year. Operating expenses escalate at 3% per year.

What is the maximum loan amount you can obtain?