1. A developer is planning a 20-unit apartment building that has an estimated total cost of $5,000,000, which includes the land. After the project is completed and leased up (stabilized) it is expected to have pro forma NOI of $300,000. Market cap rates are at 5%. They have talked to local banks and it looks like current underwriting guidelines are as
   follows:
   • Loan to Value 60%
2. • Loan to Cost 70%
   • DCR 1.20
   • Underwriting interest rate 6%
   • Underwriting Amortization 30 years
3. 
   
4. Required
5. What loan amount should the developer use in their pro forma?

Answer rating: 100% (QA)

To determine the loan amount that the developer should use in their pro forma we need to consider th... View the full answer