Loan Balance/Property Value article
How is the Loan Balance/Property Value calculated for commercial real estate investments and developments? What are the factors that the Loan Balance/Property Value takes into consideration when shown in a proforma income statement, and what is ignored? Why is the Loan Balance/Property Value useful for investment real estate? These are the questions that are explored using the Proforma Example in this article.
Start a 14 Day Free Trial
|
|
Video Title: Learn about the Loan Balance/Property Value
Video Publication_Date: Monday, April 14, 2025
Video Duration: 0:52
Video Description:
The topic for this commercial real estate investment analysis video is Loan Balance/Property Value. Throughout the video planEASe Software is used to illustrate Loan Balance/Property Value. The video does not use the current Proforma Example, but all the factors that the Loan Balance/Property Value are sensitive to are covered.
|
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 |
| Less: Loan Repayment | 2,164,359 | 2,113,745 | 2,141,394 | 2,079,651 | 2,012,784 | 1,940,367 |
| Sale Value | $3,329,006 | $3,591,128 | $3,800,275 | $3,698,723 | $3,795,175 | $3,560,371 |
| Loan Balance/Property Value | 65.0% | 58.9% | 56.3% | 56.2% | 53.0% | 54.5% |
In this case the 2012 Loan Balance/Property Value was calculated by: | 2012 Loan Balance | 2,141,394 |
| divide by 2012 Projected Sale Value | $3,800,275 |
| equals the 2012 Loan Balance/Property Value | 56.3% |
How is the Lender Yield calculated?
The Rate of Return (IRR or MIRR, depending on the Model being used) on the Total Debt Service for the property or investment. It is computed by reversing the sign of the Debt Service (to look at it from the Lender's perspective, where the draw is an outflow and the debt service and repay are inflows) and computing returns as normal on these reversed cash flows.
Written by
Michael Feakins, CCIM
of planEASe Software