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If the cap rate on a property is 7% and loans are available at a 6% mortgage constant then what is the expected income component
If the cap rate on a property is 7% and loans are available at a 6% mortgage constant then what is the expected income component on the before-tax return (i.e., cash-on-cash return) if the investor borrows 60% of the property price? The mortgage constant is the mortgage capitalization rate and defined as the annual amount of debt service to the total value of the loan. For example, a $1,000 payment per month on $200,000 is a mortgage constant of $12,000 / $200,000 = 6%. what is the answer if the leverage ratio equals 3
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