Calculate dcr for income producing property to be acquired

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Reference no: EM131465100

a. Calculate the DCR for an income producing property to be acquired at a price of $8M and a CAP of 6%. The down payment on the property is 30% of the property value and the mortgage on the remaining balance is a fixed-rate interest only loan at a rate of 4%.

b. What is the meaning of a DCR of 1.30, for example? Please explain.

c. List and briefly explain three different factors that are likely to cause the lender to require a higher DCR from investors?

Reference no: EM131465100

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