I$\mathrm{.}6$ You plan to invest in a property whose net operating income $($NOI$)$ is $$80,000$ per year. You have $$700,000$ of own capital and need to borrow to finance the rest of the project. The loan you$$ve been offered is a $5\%$ loan amortizing at a $6-$year rate with monthly payments. The underwriting criteria specify a debt service coverage ratio $($DCR$)$ of no less than $120\%$ and a maximum LTV of $60\%.$

Would you be able to proceed with your project?

We estimate that current cap rates are $6\%.$

a$.$ Not with these conditions

b$.$ Yes

c$.$ Yes, if manage to negotiate a longer amortization period

d$.$ Yes, if manage to negotiate a lower interest rate