Debt Service Coverage Ratio Calculator: Determine Your DSCR
The debt service coverage ratio (DSCR) offers a key but often misunderstood tool for all commercial real estate financing parties. For instance, investors may use this formula to adjust offers, track performance, calculate profit margins, and determine when they should obtain financing or seek to refinance. In contrast, lenders employ the figure during underwriting to decide if the property earns enough income to justify the risk.
Find … Read More
Cap Rate Calculator: Calculate Property Cap Rates
Cap Rate for Commercial Real Estate
Capitalization rates calculate the expected annual return on investment that commercial real estate properties will generate. Cap rates can show investors how much they might expect to receive from a particular property, and thereby provide a metric for evaluating the property.
Cap rates are often looked at by lenders when financing commercial property, this is one metric that … Read More
Debt Yield Calculator: Here’s How to Calculate Your Yield
Debt yield hasn’t traditionally been a primary commercial real estate loan underwriting metric, but more lenders are incorporating it into their criteria. In the current real estate market, measuring debt yield ratios provides lenders with a stable assessment regardless of unusual or changing conditions.
What is Debt Yield?
Debt yield is a standardized way to measure net operating income (NOI) against total loan … Read More
Federal Reserve’s Reaction to Inflation, Unemployment, and Effect on Interest Rates
Major highlights from last week’s Federal Reserve call include 1) Inflation is currently at 5%, which is above the Fed’s traditional 2% target; 2) The Federal Reserve is looking to pull back some of the quantitative easing it has deployed since the start of COVID; and 3) Before any plans to increase interest rates, the Federal Reserve will be looking to taper off government … Read More
Top Tax Benefits When Investing in Commercial Real Estate
Commercial real estate (CRE) is an attractive investment for investors for many reasons, but the tax benefits are a significant draw. Over the course of the life of an investment, these tangible benefits can lead to a substantial difference in returns.
Understanding the tax benefits associated with CRE is a tall order, but if you’re considering an investment, here are eight top commercial real estate … Read More
How Much Are Commercial Property Closing Costs?
The closing costs on a commercial investment property are can become substantial, often reaching tens of thousands. If you’re purchasing an investment property, here’s a breakdown of the various commercial property closing costs you can expect.
Flat-Fee Commercial Property Closing Costs
The simplest commercial real estate closing costs are flat-fee expenses that remain relatively standard across all investment properties. These include title insurance, appraisals, environmental … Read More
How To Build a Personal Financial Statement For Commercial Loans
A personal financial statement is often among the required documentation when applying for a business loan. Even though business loans are distinct from personal loans, lenders might want to see the borrower’s personal financial situation for a variety of reasons.
If you’re applying for a business loan soon, here’s an explanation of what this document is and how to go about making a personal financial … Read More
How To Build a Schedule Of Real Estate Owned (SREO) Form
One of the first steps in applying for a commercial mortgage loan is creating a Schedule Of Real Estate Form. Learn all about it and access a free excel template.
Types of Prepayment Penalties in Commercial Real Estate Financing
Step-Down, Fixed Fee, Yield Maintenance, or Defeasance. The most common form of prepayment penalties. This guide will teach you the difference.
Cost Segregation: Pay Less Taxes on CRE Investments
One of the biggest areas of focus for people investing in commercial real estate is how to handle the tax implications. If investors aren’t well-versed in how to legally reduce their tax burden, they could end up paying much more than they have to. That would make their great investment a reasonable one, at best. At worst, it could mean their investment would … Read More