Hello,
Does anyone have a MF model with loan sizing constraints? I have an interview with a large nyc firm that said I will essentially have to build out a mf model and then figure out the loan amount given loan constraints? Has anyone encountered this or at least built a model that tackles this?
Any advice is helpful.
Thanks.
https://www.adventuresincre.com/watch-build-multifamily-real-estate-mod…
This is definitely a great model, however it doesn't show modeling with any loan constraints.
I am happy to search but do you know if he also models a MF model with loan constraints?
Should be some very basic min/max functions you really can't figure this out...?
I am sure I could, however I believe what I will be tested on is using something like dscr or LTV to figure out what the appropriate loan balance should be. While the concept isn't too complex, I think it would be nice to see it done in a neat way already (I tend to learn better rebuilding already built models).
Damn....feel bad for whoever is considering hiring this guy
While I don’t agree with the other guy putting you down, you are acting a bit entitled. A big part of working in real estate and finance in general is the ability to tackle problems that you’ve never seen before, and this is a fairly simple problem. That being said, there was a point in time where I didn’t know how to do this either, so I’ll help you out.
Build out your income statement to arrive at year 1 NOI, or just make up an NOI number and use that.
Assumptions: it’s a 5% interest only Loan to make things easy, use a 5% cap rate to arrive at value, a minimum DSCR of 1.20x, and a max LTV of 75%
Divide NOI by the DSCR Minimum to find the max amount of interest expense. Divide this interest expense by the interest rate to arrive at the max loan value based on DSCR constraints. If you want to use an amortizing loan rather than an interest only loan, you’ll have to use the =PMT formula but let’s ignore that for now
Divide NOI by your cap rate to arrive at value of the building. Then multiply by your Max LTV to find the max loan value based on LTV constraints.
Take the minimum of the two Max Loans to arrive at your answer
All you have to do is remove the IRR calculations in an equity model, add the calculations I described above, and boom you’ve got a debt model
Honestly this is really basic stuff. If you can't do this then, with all seriousness, you do not deserve the job.