You have purchased a property with NOI of $$1,000,000$ at a cap rate of $6\%.$ To finance the acquisition of the property, you have two choices:

A first mortgage lender will lend you up to $70\%$ of the value at a rate of $2\mathrm{.}5\%$ based on a $30-$year amortization, monthly pay. The lender will also permit you to borrow up to $25\%$ of your equity via a mezzanine loan with an interest of $7\%,$ interest only, provided the overall DSCR does not fall below $1\mathrm{.}50$X; or$,$

The lender will provide financing up to $75\%$ of the value at a rate of $2\mathrm{.}625\%.$ Payments are also monthly based on a $30-$year payout.

Determine the net cash flow to the owner under both scenarios.

Which proposal would you select?