calculate
- All
- Africa
- Angola
- Angola
- Application Process
- appraisal
- benefits
- Best of Brooklyn
- BRRR
- cash out refinance
- Cash Reserves
- commercial loan
- commercial real estate
- cooking
- coop
- coops
- Côte d’Ivoire
- CREF
- crypto
- dscr loa
- dscr loan
- dscr mortgage
- ECOWAS
- Francophone
- French
- Gabon
- housing cost
- Infrastructure
- interest
- investment property
- investment property cash out refinance
- investments
- Investor
- Ivory Coast
- LLC
- LLC Mortgage
- Loans
- mortgage
- mortgage faq
- Mortgage in an LLC
- mortgage rates
- New York
- Non-qm
- NYC
- office condos
- Portfolio
- portuguese
- Property
- Property Portfolio
- real estate
- real estate FAQ
- refinance
- refinancing
- rent
- rental property
- Senegal
- stocks
- Uncategorized
- underlying co-op mortgage
June 8, 2017
The internal rate of return (IRR) is a metric used by real estate professionals to determine the net money you’ve made on an investment by considering the timing and magnitude of the return. However, its main use is to compare investments. By calculating the IRR of many potential investments, you can see which one is wiser. The calculated IRRs must be higher than the company’s cost of capital, and whichever one is highest is the wiser investment (provided they have equal risk). The manual calculation for IRR is highly complex, and can only be solved through tedious trial and error. This equation is as complicated as it looks, and it’s only a three-year calculation. To solve it, you would have to keep testing potential IRRs until you get an NPV equal to zero. Your result would be the […]
May 31, 2017
If you’re looking to obtain a loan to finance commercial property, one important metric you’ll need to provide your lender with is the DSCR, or debt service coverage ratio. The DSCR shows how well you will be able to repay the loan, and helps your lender determine the size of the loan. You can calculate it by dividing your business’s net operating income (NOI) by the total debt service. Debt Service Coverage Ratio (DSCR) = Net Operating Income (NOI) / total debt service A DSCR of 1.0 means that you’ll be able to pay back your loan with no wiggle room. Obviously, this is not ideal. The DSCR requirement varies by lender, loan type, and property type, but it will always be above 1.0 to provide a cushion in case something goes wrong. Calculating your NOI Your NOI is defined […]