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Posted on Sep 05, 2024

Financial leverage can be helpful in that it stretches your equity, but it can be hurtful if you cannot make the payments to your lender.

Financial leverage can be helpful in that it stretches your equity, but it can be hurtful if you cannot make the payments to your lender. So, what can you learn from this investment in a real estate deal? What might you consider in recasting the capital stack? Four sentences, please!

10% Equity

Loan Interest Rate: 7%

Loan Amortization: 20-years

Total Capitalization: $20 million

Cash Flow Available for Debt Service (including Amortization) and partner returns: $1.5 million

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