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sizing a mortgage loan amount
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How to Use Debt Yield to Calculate Loan Amount

In our glossary of commercial real estate terms, we recently answered the question: what is debt yield? As a follow up to that entry, I thought I’d expand on the concept of debt yield by showing you how lenders use debt yield to come up with…
Excel for Real Estate Certification
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Why I'm REFM Excel for Real Estate Certified

In the unlikely event you've visited my LinkedIn page lately or happened upon Bruce Kirsch's list of REFM Certification Holders, you might have noticed that over the last year I've completed my REFM Excel for Real Estate certification. In…
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The A.CRE Method for Doing Cap Rate Math in Your Head

In this post, I'd like to share a method, that with a little practice, will enable you to quickly do cap rate math in your head; whether it’s quickly figuring out what the sale or purchase price would be of a property based on the NOI and…
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Construction Draw Schedule: Accounting For True LTC

Mitigating A Common and Potentially Costly Error During Development Underwriting When lenders provide debt for a development project, they lend based on a Loan-to-Cost ratio (LTC), which is simply the percent of the total budget the lender…
a shopping center with robust sales and low occupancy cost
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Tenant Sales and Occupancy Cost in Retail Underwriting

When underwriting a retail investment, rollover risk is an incredibly important consideration. You, as a prospective debt or equity investor in the property, need to understand how secure the cash flows you're buying are; or in other words,…
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Calculate Residual Land Value in Excel

Here's the scenario. You're a real estate developer. You spot a prime parcel of land that would be perfect for your real estate project. So you approach the owner of the land about selling and she says, "Okay, bring me an offer." How much do…
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The Limitations of IRR When Evaluating Real Estate Investments

The internal rate of return is one of the most commonly used metrics to value real estate investment opportunities. Simply put, the IRR is the target percent an investor is expected to earn over the life of the investment if the investment performs…
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30/360, Actual/365, and Actual/360 - How Lenders Calculate Interest on CRE Loans – Some Important Insights

Commercial real estate lenders commonly calculate loans in three ways: 30/360, Actual/365 (aka 365/365), and Actual/360 (aka 365/360). Real estate professionals should be aware of these methods if they want to understand the real interest…
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After Tax Analysis in Real Estate

When modeling real estate investments, industry practice is generally to stop at before tax cash flow. And this makes sense in most instances. No two owners of real estate have the exact same tax situation and no two properties necessarily…