• Inkoom is analyzing an apartment investment with the following characteristics:
  • Potential gross income ZAR1,000,000 - Vacancy allowance (100,000) Effective gross income 900,000 - Operating expenses 300,000 Net operating income ZAR600,000
  • The preliminary estimate of value for this property is ZAR7 million.
  • Edwards Mortgage is willing to provide a 5-year balloon loan at 7.25 percent on a 20-year amortization schedule with monthly payments. The minimum debt-coverage ratio (DCR) is 1.25 and the maximum loan-to-value (LTV) ratio is 75 percent.

Based on Inkoom's preliminary forecast and his lender's underwriting criteria, what is the maximum loan amount Inkoom can expect?

Answer rating: 100% (QA)

To determine the maximum loan amount Inkoom can expect we need to consider the lenders underwriting ... View the full answer