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Question 1 of 14

CAP RATES

A property is selling for $2,950,000.

Scheduled Gross Income (SGI) is $373,000.

Current vacancy is 8%.

Net Operating Income (NOI) is $153,105.

What is the cap rate?

A

4.58%

B

5.19%

C

6.04%

D

Not sure

Question 2 of 14

LOAN PAYOFF

An investor secured a $3,875,000 loan at 5.2% with monthly payments amortized over 30 years.

Five years later, they want to sell the property and pay off the loan in full. The lender’s prepayment penalty is 3%.

What is the payoff amount?

A

$3,601,045

B

$3,568,336

C

$3,675,386

D

Not sure

Question 3 of 14

INVESTMENT APPRECIATION

An investor acquired a 42-unit property for $6 million at a 6.0% cap rate.

During the holding period, they increased the SGI by an average of $128 per unit per month.

Vacancy averages 3%.

Management fees are 6% and all other operating expenses remain unchanged.

If they sell the property at a 5.75% cap rate, how much appreciation did they create ?

A

$1,039,845

B

$1,283,862

C

$1,552,109

D

Not sure

Question 4 of 14

BALLOON PAYMENT

The price of an investment property is $3,750,000.

The LTV of the loan is 70%

The interest rate is 7.75% on a 30-year amortization schedule.

The loan term is 10 years.

What is the balloon payment?

A

$2,290,743

B

$2,334,095

C

$2,918,223

D

Not sure

Question 5 of 14

RETURN ON EQUITY

An investor bought an apartment complex five years ago for $5.25 million at a 6.5% cap rate.

At the time, they secured a 75% LTV loan at a 4.5% interest rate, with payments amortized over 30 years.

Today, the property is operating at a 9.0% cap rate based on the original acquisition price, and the investors are considering selling the property.

What is the investor’s current return on equity?

A

13.9%

B

17.8%

C

20.1%

D

Not sure

Question 6 of 14

COMMERCIAL MORTGAGE LOANS

A commercial property has a Gross Rent Multiple of 12.2. The contract price is $2,837,720.

Expenses are 35% of Scheduled Gross Income and vacancy is 3%.

The lender’s minimum debt service coverage ratio for the loan is 1.15. Payments would be amortized over 30 yrs, and the interest rate is 5.5%.

What is the maximum loan amount on this property?

A

$1,840,498

B

$1,974,872

C

$2,012,998

D

Not sure

Question 7 of 14

BALLOON PAYMENT

The NOI of a property is $245,000 and the cap rate is 7%.

The LTV on the loan is 80%. The interest rate is 6.75%. The loan term is 7 years and the amortization is 30 years.

What will be the balloon payment at maturity?

A

$2,334,095

B

$2,542,049

C

$2,918,430

D

Not sure

Question 8 of 14

MORTGAGE LOAN TERMS

The price of a property for sale is $1,200,000 and the Net Operating Income is $90,000.

The seller will carry an 80% LTV interest-only note at 6% for ten years, after which time the buyer must pay the loan off.

After how many years will the buyer have doubled his equity from principal paydown?

A

5.5 years

B

7.2 years

C

10 years

D

Never

E

Not sure

Question 9 of 14

CASH-ON-CASH RETURN

An investor buys a property for $4.35 million at a 6% cap rate.

They are able to secure a loan with a debt service coverage ratio of 1.25 and an interest rate of 4.75% with payments amortized over 30 years.

What is the investor’s cash-on-cash return in the first year?

A

5.22%

B

6.96%

C

7.48%

D

Not sure

Question 10 of 14

MAXIMUM LEVERAGE

An investor is buying a property for $7,000,000 at a 7.5% CAP.

The lender’s minimum debt service coverage ratio is 1.3. The amortization and term of the loan is 25 years, and the interest rate is 5.875%.

What is the investor’s maximum loan amount?

A

$5,285,816

B

$5,445,721

C

$5,603,392

D

Not sure

Question 11 of 14

TARGET INVESTMENT RETURN

A buyer of an investment property wants a cash-on-cash return of 8% on in-place income on day one.

The property’s NOI is $502,788.

The loan obtainable is for $3,825,000 at 6.25% and a 25 year term.

What is the most the buyer can pay?

A

$6,125,000

B

$6,325,000

C

$6,575,000

D

Not sure

Question 12 of 14

COST OF CAPITAL

An investor secures a 75% LTV loan on an investment property for sale at $4,750,000. The interest rate is 5.5%, the loan is amortized over 25 years, and the loan term is 7 years. The lender charges 2 discount points and $8500 in fees at origination.

Four years later, the investor sells the property and pays off the loan with a 2% prepayment penalty.

What was the investor’s actual annual cost of capital on the loan?

A

5.58%

B

6.18%

C

6.58%

D

Not sure

Question 13 of 14

MORTGAGE LOAN INTEREST RATE

A buyer is preparing to write an offer on a property for $4,500,000 and wants to put down only 20%.

The best available conventional loan provides for a 70% LTV at 7.5% interest with a 25-year amortization.

The buyer asks that the seller carry an interest-only 2nd trust deed for the difference.

The lender’s debt service coverage requires that the total combined payments not exceed $26,650 per month.

What is the maximum the interest rate the seller could charge on the 2nd Lien to keep the buyer’s total monthly payment at $26,650?

A

7.99%

B

8.49%

C

8.99%

D

Not sure

Question 14 of 14

For context, what is your primary role as it relates to WHY you took this skills challenge. (This will help provide you with the most relevant free resources.)

"I am (or want to be) a _______."

A

Real Estate Investor / Asset Manager

B

Real Estate Agent / CRE Broker

C

Commercial Lender / Mortgage Broker

D

Student/Teacher/Other

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Take the Free CRE Skills Challenge

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CAP RATES A property is selling for $2,950,000. Scheduled Gross Income (SGI) is $373,000. Current vacancy is 8%. Net Operating Income (NOI) is $153,105. What is the cap rate?

LOAN PAYOFF An investor secured a $3,875,000 loan at 5.2% with monthly payments amortized over 30 years. Five years later, they want to sell the property and pay off the loan in full. The lender’s prepayment penalty is 3%. What is the payoff amount?

BALLOON PAYMENT The price of an investment property is $3,750,000. The LTV of the loan is 70% The interest rate is 7.75% on a 30-year amortization schedule. The loan term is 10 years. What is the balloon payment?

BALLOON PAYMENT The NOI of a property is $245,000 and the cap rate is 7%. The LTV on the loan is 80%. The interest rate is 6.75%. The loan term is 7 years and the amortization is 30 years. What will be the balloon payment at maturity?

CASH-ON-CASH RETURN An investor buys a property for $4.35 million at a 6% cap rate. They are able to secure a loan with a debt service coverage ratio of 1.25 and an interest rate of 4.75% with payments amortized over 30 years. What is the investor’s cash-on-cash return in the first year?

MAXIMUM LEVERAGE An investor is buying a property for $7,000,000 at a 7.5% CAP. The lender’s minimum debt service coverage ratio is 1.3. The amortization and term of the loan is 25 years, and the interest rate is 5.875%. What is the investor’s maximum loan amount?

TARGET INVESTMENT RETURN A buyer of an investment property wants a cash-on-cash return of 8% on in-place income on day one. The property’s NOI is $502,788. The loan obtainable is for $3,825,000 at 6.25% and a 25 year term. What is the most the buyer can pay?

For context, what is your primary role as it relates to WHY you took this skills challenge. (This will help provide you with the most relevant free resources.) "I am (or want to be) a _______."

Confirm and Submit

CAP RATES

A property is selling for $2,950,000.

Scheduled Gross Income (SGI) is $373,000.

Current vacancy is 8%.

Net Operating Income (NOI) is $153,105.

What is the cap rate?

LOAN PAYOFF

An investor secured a $3,875,000 loan at 5.2% with monthly payments amortized over 30 years.

Five years later, they want to sell the property and pay off the loan in full. The lender’s prepayment penalty is 3%.

What is the payoff amount?

BALLOON PAYMENT

The price of an investment property is $3,750,000.

The LTV of the loan is 70%

The interest rate is 7.75% on a 30-year amortization schedule.

The loan term is 10 years.

What is the balloon payment?

BALLOON PAYMENT

The NOI of a property is $245,000 and the cap rate is 7%.

The LTV on the loan is 80%. The interest rate is 6.75%. The loan term is 7 years and the amortization is 30 years.

What will be the balloon payment at maturity?

CASH-ON-CASH RETURN

An investor buys a property for $4.35 million at a 6% cap rate.

They are able to secure a loan with a debt service coverage ratio of 1.25 and an interest rate of 4.75% with payments amortized over 30 years.

What is the investor’s cash-on-cash return in the first year?

MAXIMUM LEVERAGE

An investor is buying a property for $7,000,000 at a 7.5% CAP.

The lender’s minimum debt service coverage ratio is 1.3. The amortization and term of the loan is 25 years, and the interest rate is 5.875%.

What is the investor’s maximum loan amount?

TARGET INVESTMENT RETURN

A buyer of an investment property wants a cash-on-cash return of 8% on in-place income on day one.

The property’s NOI is $502,788.

The loan obtainable is for $3,825,000 at 6.25% and a 25 year term.

What is the most the buyer can pay?

For context, what is your primary role as it relates to WHY you took this skills challenge. (This will help provide you with the most relevant free resources.)

"I am (or want to be) a _______."