ou've come up with $1,500,000 in equity (which you used in its entierty to purchase land and get approvals) and are about to start a development project which will be 100% further capitalized with a construction loan. You are so good, you only think the project will take 4 months.

The following table shows the projected draws to pay the development costs. The draw are projected to occur at the BEGINNING of each month.

Month Amount

1 $1,000,000.00

2 $850,000.00

3 $1,500,000.00

4 $2,500,000.00

What is the projected balance due on a construction loan at the end of the fourth month if the interest rate is 6.5 percent per year with monthly compounding?

Total Draw =

In your Construction Budget, what would you use as your total $ input for "interest expense"?

Assume that the construction loan is "taken out" by a permanent loan with a 20 year amortization, 6% nominal annual interest, monthly payments, and 2% origination fee (that the lender will add to the loans starting balance),

What is the loan amount? $

What are your monthly payments?$

What ANNUAL NOI must you have if the permanent loan requires a 1.3 DSCR? $

Assume this NOI is a reasonable estimate for what will happen and that the bank agrees with your estimate for NOI.

If the property is valued using an 8% cap rate, What is the implied LTV?%

would this loan happen if the lender requires a 70% LTV? (answer 1 for yes and 0 for no)

If the property is valued using an 7.5% cap rate, what is the LTV?LTV =%(out to two decimal points)

would this loan happen if the lender requires a 70% LTV?

If your NOI does not change, what is your leveraged Cash Flow $ for the first year after development is complete? $

How much did the entire project cost according to your development budget which includes leaseup and the placement of the permanent loan? $

Without consideration for TVM, what is your leveraged return expressed as a % to two decimals