For context, please first give us some insight into your primary role as it relates to your motivation for taking this skills challenge, by completing the following sentence: 

"I am (or want to be) a _______."

Cap Rates

A property is selling for $2,950,000 that has a Scheduled Gross Income of $373,000.  The current vacancy is 8%, and the Net Operating Income is $153,105. What is the cap rate?

Loan Payoff

An investor secured a $3,875,000 loan at 5.2% with monthly payments amortized over 30 years. Five years later, they want to sell the property and pay off the loan in full. The lender’s prepayment penalty is 3%. What is the payoff amount?

Cap Rates & Investing

An investor acquired a 42-unit property for $6 million at a 6.0% cap rate.

During the holding period, they increased the SGI by an average of $128 per unit per month. Vacancy averages 3%. Management fees are 6% and all other operating expenses remain unchanged.

How much appreciation did the investor create if they sell the property at a 5.75% cap rate?

Balloon Payment

The price of an investment property is $3,750,000. The LTV of the loan is 70% and the interest rate is 7.75% on a 30-year amortization schedule. However, the loan term is 10 years.

What is the balloon payment?

Real Estate Investing

An investor bought an apartment complex five years ago for $5.25 million at a 6.5% cap rate. They secured a 75% LTV loan at a 4.5% interest rate, with payments amortized over 30 years. Today, the property is operating at a 9.0% cap rate based on the original acquisition price, and the investors are considering selling the property.

What is the investor’s current return on equity?

Commercial Real Estate Loans

A commercial property has a Gross Rent Multiple of 12.2. The contract price is $2,837,720.

Expenses are 35% of Scheduled Gross Income and vacancy is 3%. 

The lender’s minimum debt service coverage ratio for the loan is 1.15. Payments would be amortized over 30 yrs, and the interest rate is 5.5%.

What is the maximum loan amount on this property?

Mortgage Loan Terms

The price of a property for sale is $1,200,000 and the Net Operating Income is $90,000.

The seller will carry an 80% LTV interest-only note at 6% for ten years, after which time the buyer must pay the loan off.

After how many years will the buyer have doubled his equity from principal paydown?

Mortgage Loans and Investing

An investor buys a property for $4.35 million at a 6% cap rate.

They are able to secure a loan with a debt service coverage ratio of 1.25 and an interest rate of 4.75% with payments amortized over 30 years.

What is the investor’s cash-on-cash return in the first year?

Mortgage Loans

The NOI of a property is $245,000 and the cap rate is 7%.

The LTV on the loan is 80%. The interest rate is 6.75%. The loan term is 7 years and the amortization is 30 years.

What will be the balloon payment at maturity?

Mortgage Loans

An investor is buying a property for $7,000,000 at a 7.5% CAP.

The lender’s minimum debt service coverage ratio is 1.3. The amortization and term of the loan is 25 years, and the interest rate is 5.875%. 

What is the investor’s maximum loan amount?

Investment Property Loans

A buyer of an investment property wants a cash-on-cash return of 8% on in-place income on day one.

The property’s NOI is $502,788.

The loan obtainable is for $3,825,000 at 6.25% and a 25 year term. 

What is the most the buyer can pay?

Cost of Capital

An investor secures a 75% LTV loan on an investment property for sale at $4,750,000. The interest rate is 5.5%, the loan is amortized over 25 years, and the loan term is 7 years. The lender charges 2 discount points and $8500 in fees at origination.

Four years later, the investor sells the property and pays off the loan with a 2% prepayment penalty.

What was the investor’s actual annual cost of capital on the loan?

Investment Property Mortgage Loan

A buyer is preparing to write an offer on a property for $4,500,000 and wants to put down only 20%.

The best available conventional loan provides for a 70% LTV at 7.5% interest with a 25-year amortization. 

The buyer asks that the seller carry an interest-only 2nd trust deed for the difference. 

The lender’s debt service coverage requires that the total combined payments not exceed $26,650 per month.

What is the maximum the interest rate the seller could charge on the 2nd Lien to keep the buyer’s total monthly payment at $26,650?