Section $2$

You come across a piece of vacant land. After analyzing the highest and best use, you determine to move forward. Here are

your projections upon completion and stabilization Year $1$:

You determine cap rates are $5\mathrm{.}00\%$ for similar projects.

What is the estimated value of the project upon completion and stabilzation?

What is your loan amount at $80\%$ Loan to Value $($LTM$)?$

Assuming permanent loan financing of $4\mathrm{.}00\%,30$ year amortization and a minimum $1\mathrm{.}20x$ DSCR$,$ what is your

maximum loan amount?

Your costs per buildable SF are Hard Costs of $$70$psf$,$ Soft Costs of $$20$psf$,$ and Interest of $$15$psf$.$ Build your construction

budget and determine the following:

What is the maximum price you should pay for the Land $($the residual value$),$ assuming you want a $20\%$ return and

have to pay $3\%$ in selling expenses?

If you manage to buy the land for $$7,000,000,$ what would your loan amount be if you were limited to $70\%$ Loan to Cost

$($LTC$)?$