Question

A property has NOI of 1,000,000 and would trade at a cap rate of 5%. You can borrow at a 60% LTV, 5% interest rate and 25-year amortization schedule.

- What is the value of the property?
- What is your debt service coverage?

Answer #1

Ann purchased a property for $1,000,000. She bought the property
at a 7.00% cap rate. She finances the purchase with an Interest
Only senior loan at 60% LTV at an interest rate of 4.00%. She also
decides to get subordinate / mezzanine financing for 20% of the
capital stack (from 60%-80% LTV) at 8.00% interest only. What is
Ann’s return on equity (ROE) in year 1?

You plan to purchase a property which has an expected NOI of
$200,000. You plan to borrow $1,500,000 at a 5% annual rate for 30
years. What is the DCR for this investment?
If the property in #9 is being purchased at an 8% cap rate,
assuming the same loan information what is the LTV for this
purchase?
show work

You are interested in purchasing a commercial property. You
project that the property’s NOI next year will be $1,200,000. The
current cap rate for similar properties is 8%. You are interested
in acquiring a loan with a 30-year amortization term at a 6% annual
interest rate. Based on the two metrics provided below calculate
the loan amount. You must show all your calculations to receive
full credit. (a) LTV = 75% [8 points] (b) DCR = 1.35

1. Calculate NOI for below T12 (Fairbanks, Alaska).
GPR: $1M
Loss to Lease: $10k
Vacancy: $50k
Controllable Expenses: $300k
Non Controllable Expenses: $175k
2. Using the same NOI and appropriate cap rate for this city, what
is the value of the property (aprox.)? Show work.
3. Loan sizing using LTV methodology. A banker indicated that they
can give you "70%" loan with a 5% interest rate and 25 year
amortization. What is the amount you think you can get for...

A property has an expected first-year NOI of $1 million. Recent
sales of similar properties indicate that a first-year (or
going-in) cap rate of 12% is reasonable for valuation purposes. A
lender requires a minimum DSCR of 1.25x and will loan up to 75% of
appraised value on a first mortgage. Say the mortgage interest rate
is 6.75%, payments are monthly, and the amortization period is 20
years. (10 points) Hint: solve for the debt
service.
what is the implied loan...

7) A Value-Added Investment: A
“for sale” property has high vacancy. Based on its weak NOI and the
seller’s valuation, the property has a cap rate of 3%. Because of
the risk (empty space), you are willing to purchase the property at
a much higher (above market) going-in cap rate, even though the
market has an overall cap rate of 8%. It is your belief that you
have found some niche tenants for the property. In the first year,
NOI...

A property has a projected year 1 NOI of $200,000. NOI is
projected to grow by 4% per year for the following 2 years, then by
2% per year for the subsequent 2 years at a 1% constant rate
afterward. Given a required return of 13%, what is the value of the
property today if you sell at the end of year 5?

Ann wants to buy a building. The annual NOI for the building
will be $100,000. She wants to get a 30 year, fully amortizing,
fixed rate mortgage at an annual rate of 5% with monthly
compounding and monthly payments to buy the building. The lender
has a minimum Debt Service Coverage Ratio (DSCR) of 1.20.
If Ann gets a 50% LTV loan for $500,000, what is her DSCR?

Suppose your lender agrees to an 80% LTV, the cost to borrow $1
at 8% for 30 years equals $0.0888 per year, NOI = $20,000, annual
debt service = $7,000 and your down payment was
$100,000. Using the Band of Investment Approach to
estimating your cap rate, the cap rate would equal
approximately:
7.1%
2.6%
8.88%
9.7%

You are interested in purchasing a commercial property. You
project that the property’s NOI nextyear will be $1,200,000. The
current cap rate for similar properties is 8%. You are interested
in acquiring a loan with a 30-year amortization term at a 6% annual
interest rate. Based on the two metrics provided below calculate
the loan amount. You must show all your calculations to receive
full credit.
14. Given the following information calculate the property’s NOI
[8 points] and BTCF [7...

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