Lecture 3/9
Real Estate And Urban Land Economics 306 with Mccabe at University of Wisconsin - Madison
About this deck
By: Bobby Kanter
Textbook:
Real Estate Principles: A Value Approach
Created: 2011-03-27
Size: 21 flashcards
Views: 11
Textbook:
Real Estate Principles: A Value ApproachCreated: 2011-03-27
Size: 21 flashcards
Views: 11
About StudyBlue
STUDYBLUE makes things that make you better at school.
Things like online flashcards with photos and audio.
Things like personalized quizzes and friendly reminders about when (and what) to study next.
Think of it as a digital backpack™: access to all of your study materials online and on your phone.
STUDYBLUE exists to make studying efficient and effective for every student, for free. Join us.
“I have been getting MUCH better grades on all my tests for school. Flash cards, notes, and quizzes are great on here. Thanks!”
Kathy
Kathy
Sign up (free) to study this.
Three C's of traditional underwriting
Collateral
Credit worthiness
Capacity
Collateral
URAR appraisal
Creditworthiness
FICO Score
Capacity
Ability to pay
Front End and Back End ratios
Underwriting changes with affordable housing programs
may override one of the guidelines
3 reasons why Sub-Prime Lending
No documentation of income
Need 100% financing
Weak Credit score
Capacity ratios
Housing Expense ratio
Total Debt Ratio
Housing Expense Ratio
= PITI / GMI
Front End
Total Debt Ratio
= (PITI + LTO) / GMI
Back End
Lock-out (commercial mortgages)
Eliminates ability of pre payment
Prepayment penalties
additional fees necessary for any pre payment
Yield Maintenance Agreement
Payment penalty based on changes in interest rates
Defeasance
Borrower must compensate lender by buying treasury securities to replicate lost cash flows
Floating Rate Mortgage
INTEREST RATE BASE DOFF LIBOR OR SOME other index
INSTALLMENT Sale Financiing
Advantageous to seller because cap gain taxes decreased overall
Joint Venture
Lender gets equity (some of the NOI) and loans some cash
Sale Leaseback
User sells property to investor and signs into long term lease, allows them to use capital on other assets
Mezzanine Debt
Second mortgage basically and increase your return on equity
If borrower doesn't have enough to put up all money for mortgage
Participation Loan
Lender receives part of the NOI and part of the sale price along with interest payments and shit on loan
Debt Coverage Ratio (DCR)
= NOI / DS
Break Even Ratio (BER)
= (OE + CAPX + DS) / DS
About this deck
By: Bobby Kanter
Textbook: Real Estate Principles: A Value Approach
Created: 2011-03-27
Size: 21 flashcards
Views: 11
Textbook:
Real Estate Principles: A Value ApproachCreated: 2011-03-27
Size: 21 flashcards
Views: 11
About StudyBlue
STUDYBLUE makes things that make you better at school.
Things like online flashcards with photos and audio.
Things like personalized quizzes and friendly reminders about when (and what) to study next.
Think of it as a digital backpack™: access to all of your study materials online and on your phone.
STUDYBLUE exists to make studying efficient and effective for every student, for free. Join us.
“I have been getting MUCH better grades on all my tests for school. Flash cards, notes, and quizzes are great on here. Thanks!”
Kathy
Kathy