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What is the indicated equity dividend rate (RE) of a property with a sale price of...

What is the indicated equity dividend rate (RE) of a property with a sale price of $400,000, an NOI of $35,000, and mortgage terms of 9.75% interest for 25 years, fully amortized with monthly payments and a loan-to-value ratio of 65%?

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Answer #1

Total Mortgage Payment per year = Monthly Payment * 12

Monthly Payment = Loan Value / PVAF(0.8125%,300)

Monthly Payment = 400000 * 65% / 112.21614

Monthly Payment = $2316.96

Total Mortgage Payment per year = Monthly Payment * 12

Total Mortgage Payment per year = $2316.96 * 12

Total Mortgage Payment per year = $27803.49

Down Payment = Sale Price * (1 - Loan Value) = 400000 * 35% = $140000

Indicated Equity Dividend Rate = (NOI - Mortgage Payments) / Down payment

Indicated Equity Dividend Rate = (35000 - 27803.49) / 140000

Indicated Equity Dividend Rate = 5.14%

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