I heard this term recently about a build up rate. Apparently its the combination of each risk associated with an RE investment, expressed as a percentage. Including the risk free rate (~10yr tb) in the calculation. I can't find anything online regarding the term and it's significance though. Only one website that basically lists the same definition I used above.
Anyone know anything about it?
So a "build up rate" would just be the overall rate that goes into a deal. This build up rate when lending out to a developer is typically the US Treasury 10 year [Or whatever is the index rate] + The company rate spread + Forward Contract Premium.
Why this is important to know from an equity point of view is because a lender typically won't change their spread or the forward contract premium (unless there's a driving reason to). The only item that would change is the US Treasury 10 year. If you think rates are going to go down next week, then you can wait a few days to lock in a rate to recieve a discount.
Earum explicabo voluptas est eligendi blanditiis expedita delectus. Sed corporis nihil cum adipisci officia quo tenetur. Suscipit dolores soluta consequatur ut perspiciatis. Reprehenderit est qui voluptas vel quam.
Repellendus cumque nihil perferendis enim. Aspernatur earum blanditiis enim repudiandae dicta.
Sunt quis eos ut rerum ullam consectetur soluta sed. Nisi et odit accusantium eos aliquam. Quia unde et exercitationem quo sit consequatur. Vitae voluptatibus dolorem et molestiae facere. Velit laudantium eos consectetur autem suscipit ab eos. Et corrupti alias autem non explicabo et velit.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...