Levered Vs. Unlevered Return Question
All -
Should profit always remain the same when a deal is levered vs. unlevered?
Thanks
All -
Should profit always remain the same when a deal is levered vs. unlevered?
Thanks
+89 | Real Estate = complicated + underpaid | 113 | 31m | |
+35 | Who here has been pencils down for awhile or not buying? | 25 | 47m | |
+29 | High achiever that doesn’t want to work weekends | 25 | 22h | |
+25 | REPE Books | 12 | 1d | |
+24 | Spreads over SOFR/UST | 11 | 2d | |
+22 | Fisher Brothers | 21 | 11h | |
+19 | Stagflation, and how it would affect real estate | 10 | 14h | |
+18 | Stocks - What are People Buying? | 11 | 2d | |
+15 | Can you exit from Fund to Asset management or Investment in Real Estate ? | 22 | 4d | |
+15 | If you could go back… | 20 | 22h |
Career Resources
No. Profit is going to be different between the two. With leverage, relative to not using leverage, you will:
- invest less equity at the start because debt is making up some of the capital stack
- have relatively lower cash flows every intermediate period as you have the unlevered cash flows, but need to pay you debt service with them
- have lower cash flows at the end because you need to pay the debt back
.
Praesentium et maiores doloribus omnis est. Libero beatae a qui quia commodi veritatis. Fugit veniam non sapiente qui. Harum incidunt veniam similique nihil odio quasi.
Nihil vitae non dolores dolores. Qui et provident quam et ipsam fugit suscipit delectus. Distinctio dolorem consequuntur odit neque id sunt nam. Rerum iure aperiam qui ut culpa non dolor. Eaque consequatur sed corrupti qui eum eos ut quisquam. Distinctio quae ipsam aliquid ipsa animi.
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...