This page allows you to estimate the maximum debt amount available for your property and perform a sensitivity analysis to see how changes in amortization or interest rate impact your financing.
Debt Calculator Section:
NOI (Net Operating Income): Enter the property's annual income after expenses. This is a critical input for calculating how much debt the property can support.
Minimum DSCR (Debt Service Coverage Ratio): This is the ratio of NOI to debt payments. It helps ensure that the property's income can cover the debt payments. The default setting is 1.25x but can be adjusted based on your lending criteria.
Maximum LTC (Loan-to-Cost Ratio): Specify the maximum percentage of the total acquisition cost that can be financed. A typical value is 70%, but you can adjust this based on your loan terms.
Purchase Cost: Input the total acquisition cost of the property, which includes the purchase price and any other related expenses.
Amortization: Enter the loan amortization period in years. This impacts the repayment schedule and total interest paid over the loan’s lifetime.
Interest Rate: Set the interest rate for the loan. You can use the slider to adjust this figure and immediately see how it affects the loan calculations.
Once you've input these values, click Calculate to determine the Maximum Debt the property can support based on your criteria.
Sensitivity Analysis Section:
The Sensitivity Analysis allows you to explore how different loan amortization periods affect key metrics such as:
Maximum Debt: The calculated loan amount remains the same across amortization periods based on your initial inputs.
LTC (Loan-to-Cost): This represents the loan as a percentage of the total cost, showing the proportion financed versus equity.
Total Interest: This field displays the total interest paid over the life of the loan, which increases with longer amortization periods.
Switch between the Amortization and Interest Rate tabs to explore how varying these factors influences your loan terms and total costs.
Use the information from this page to make informed decisions about the optimal financing structure for your project, and adjust inputs to find the best balance between debt, interest payments, and amortization.