Debt Financing

Any fee charged by the lender when issuing a loan. Financing Fees in CashFlow:

Expressed as a percentage, debt yield is a property's net operating income ("NOI") divided by the total outstanding loan amount. Some think of debt yield as the "lender's cap rate". Debt yield divided by the loan constant is equal to the debt serv...

The ratio between a property's  net operating income ("NOI") and its annual debt service. DSCR is often used as an underwriting constraint for commercial real estate loans. The formula is: DSCR = NOI / Annual Debt Service. For example, a pro...

A short term loan that is taken out pending arrangement of longer term, or permanent financing. Bridge loans typically have higher associated interest rates to compensate for additional risk. Bridge Loan in CashFlow:

A type of loan whereby the only payment made is the interest that accrues each month on the original principal balance of the loan. Interest Only Loan in CashFlow:  

A permanent loan is a long term (usually between five and ten years) loan used to finance a property. If there is an outstanding bridge loan or construction loan, then a permanent loan may be used to pay off, or "take-out" that loan. Permanent Loa...

In order to determine a loan amount for a property, one can set several "constraints" (such as  loan to cost  or  debt service coverage ratio ), and the lowest resulting value is what will be used by the model. For example, say ...

In real estate, an amortizing loan is typically a fixed-payment loan in which a portion of each month's payment goes toward interest on that month's outstanding loan balance, and the remainder goes toward reducing that balance. As the principal ge...

A loan sizing method whereby a percentage of "costs" (i.e. "Uses" on the financing tab such as property acquisition, operating cash flow shortfalls, etc.) is funded with debt. If a property's cost is $100, an acquisition loan based on 70% Loan to ...