Real Estate Finance


Having Trouble Meeting Your Deadline?

Get your assignment on Real Estate Finance  completed on time. avoid delay and – ORDER NOW

Assume that you are a looking to obtain a commercial real estate loan for a property that is for sale at $10,000,000 and generates $1,000,000 per year in NOI (Net Operating Income). You have $2,000,000 in cash that can be used as the equity (down payment) for the loan. All loans have a 25-year amortization period and a 5-year term.

(A) What is the effective cost of borrowing (lender’s yield) expressed as a percentage (%) for each of the following loans for the 5-year term?

(B) What is the outstanding loan balance (including penalties that may be due) payable to the lender at the end of the 5-year term?

  1. Lender # 1 offers you an interest only mortgage with a 9% interest rate.
  2. Lender # 2 offers you a normal constant payment mortgage with a 9% interest rate.
  3. Lender # 3 offers you a constant amortization mortgage with a 9% interest rate.
  4. Lender # 4 offers you an adjustable-rate mortgage with a 2% teaser rate for 12 months, 3% for next 24 months, and 11% thereafter.
  5. Lender # 5 offers you an 8.5% normal constant payment mortgage with a 6% upfront loan origination fee.
  6. Lender # 6 offers you an 8.5% normal constant payment mortgage with a $150/month loan servicing fee (administrative fee).
  7. Lender # 7 offers you an 8.5% normal constant payment mortgage with a 7% prepayment penalty. For this loan assume that the loan is prepaid in month 12 and you acquire a new 5% loan for the remaining 48 months.
  8. Lender # 8 offers you a PLAM (Price Level Adjusted Mortgage) with a 5% stated interest rate. Assume that the outstanding mortgage is upwardly adjusted by an index of 3% at the end of each of the 5 years.
  9. Lender # 9 offers you a 6% normal constant payment mortgage with an upfront 4% loan origination fee, a $150/month administrative fee, and a 5% prepayment penalty. Assume that this loan is prepaid early at the end of month 59, therefore subject to prepayment penalty. Calculate the mortgage balance + prepayment penalty at the end of month 59.
  10. Rank the top 3 loans above loans by which ones have the lowest overall cost of borrowing and offer any explanations that you deem relevant to justify your rankings.
Explanation & Answer

Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Order Now and we will direct you to our Order Page at Litessays. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.

Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.

Do you need an answer to this or any other questions?

Similar Posts