Question
Suppose you buy the property at the asking price of $7,000,000 and own it for exactly 1 year. You get the maximum loan you can
Suppose you buy the property at the asking price of $7,000,000 and own it for exactly 1 year. You get the maximum loan you can get that satisfies both the minimum DSCR of 1.2 and maximum LTV of 70% (use your answer in the previous question) and finance the rest with your own money (downpayment that you found in the previous question). In two years, the NOI is expected to be the same. You sell the property at the end of year 1, at a cap rate of 50 basis points below the cap rate at purchase (answer to the previous question) and you pay off the loan balance when you sell. Compute the IRR on this investment. Write your answer in percent, but do not include the % sign (e.g. if you get 13.57654%, write 13.58)
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