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You're seeking a loan to finance the development of a new bar, The Nightmare, on Elm Street. You are willing to invest $800,000.00 of equity
You're seeking a loan to finance the development of a new bar, The Nightmare, on Elm Street. You are willing to invest $800,000.00 of equity and seek a loan of $3,200,000.00 to fully finance this development. The bar has a constant annual NOI (net operating income) of $400,000.00. Upon entering his office, the banker from whom you seek the loan asks what the cap rate is on your development. What do you tell him? 20% 10% 12% 8% 1%
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