Question
You have negotiated to buy a property for $4,000,000 that has an annual NOI of $250,000 in year 1, $265,000 in year 2, and $280,000
You have negotiated to buy a property for $4,000,000 that has an annual NOI of $250,000 in year 1, $265,000 in year 2, and $280,000 in year 3.
You apply for a loan with a lender who says the loan amount must size based on a maximum 70% LTV and a minimum 1.25x DSCR. The lender quotes an interest rate of 2.00% over the 10-year Treasury, which is 4.85% today. The lender will amortize the loan principal at 25-years.
Size this loan based on Year 1 NOI and the purchase price (assumed value). What is the maximum loan amount?
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakin
7th Global Edition
0273754440, 9780273754442
