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What is the debt yield

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Question - An investor is looking to buy a property with an NOI of $407,000 for $11,750,000. A term sheet was presented by the mortgage broker with a competitive interest rate. The investor wants to borrow $7,000,000. The term sheet has the following clause:

(the loan is subject to a max 60% LTV and a min Debt Yield of no less than 6%).

(Show your calculations for each of the 3 questions below).

What is the LTV? Does it meet the requirement of the term sheet?

What is the Debt Yield? Does it meet the term sheet requirement?

What can the investor do to qualify for this loan if it does not meet loan requirements?

Reference no: EM133155449

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