Real estate training for commercial real estate professionals, or anyone wanting to learn how to invest in commercial real estate and multifamily properties.
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Trevor Calton is a longtime industry veteran and Professor of Real Estate Finance & Investments, teaching commercial real estate classes and training professionals since 2005. His commercial real estate classes and real estate finance development program helps people at all levels develop a successful real estate investment strategy.
If you need commercial real estate education, a commercial real estate coach, or a real estate investment mentor, you’ve come to the right place.
Thanks for the response Trevor. I'm just trying to find the formula for principal amortization. Basically identifying how amortization will impact cash on cash. I know it sounds convoluted.
It’s not as simple as a “formula” but it’s also fairly easy once you understand the components. I get this question so often that I made the course on how to do the calculations free for everyone. No strings attached and it takes less than an hour: learn.realestatefinanceacademy.com/finance-prerequisite
It’s a simple Loan Amortization calculation using the Time Value of Money. It’s how all loan payments are calculated. Check the link for the free course to learn how to do it in just a few minutes. 😉👍🏻 - Trevor
I’m not sure I understand the question. But cash-on-cash is your annual net cash flow (after debt service) divided by your total cash invested. Principal amortization isn’t a part of the formula, in this case… Let me know if you have more questions. Happy to help! - Trevor
Depending on where you are in the market cycle, the current interest rates, lender guidelines, etc., you may or may not be able to refinance the total debt and pay off the HELOC. The assumption that you always can do that is what hurt most borrowers leading up to the 2008 financial crisis, and it’s also what’s hurting a lot of borrowers in 2023-24, because rates are too high and people can’t refinance everything they owe against the property. - Trevor
No, you cannot take any funds from the transaction and you must replace an equivalent amount of debt. Talk to your accountant for details on the tax consequences. Hope that helps. - Trevor
LTV is a measurement of how much risk is born by lender (using their money) versus the borrower. It’s a maximum limit of the loan amount relative to the property value. Lower LTV loans usually have a slightly lower interest rate, because of the lower risk to the lender. Hope that helps! - Trevor
Every crash/collapse brings with it an equivalent market chance if you are early informed and equipped, I've seen folks amass up to $1m amid economy crisis, and even pull it off easily in favorable conditions. Unequivocally, the collapse is getting somebody somewhere rich.
I think investors should always put their cash to work, especially In 2024, we'll start to see more market diversification. I'm hoping to invest about $350k of my savings in stocks against next year. Hope to make millions in 2024..
Since risk is at an all-time high right now, perhaps you should be a little more patient and return when it has decreased. Alternatively, you can consult a trained financial expert for strategy.
Yes true, I have been in touch with a brokerage Advisor. With an initial starting reserve of $80k, my advisor chooses the entry and exit commands for my portfolio, which has grown to approximately $550k.
NICOLE ANASTASIA PLUMLEE' is her name. She is regarded as a genius in her area and works for Empower Financial Services. She’s quite known in her field, look-her up. .
Wow thats the Bank Version, but the reality is reverse... The last payment is $2 for the principal and $596 is the interest. so your loan balance is $2 and you have to pay it for $596 gotcha..
Can you please help me with my mortgage payments. I have a $60,000,00 left on my mortgage loan and I pay $345,00 a fortnight and my interest rate is 9% percent and the loan term is 11 years. Could you please explain how I should get this loan out and how I can pay it off. I love your videos about, Real Estate and Finances . Well the Academy is a great resource for people looking for a new career opportunity like myself.
Thank you for the kind words. Where are you located? You should be able to refinance your debt with a community bank or a mortgage lender at a rate lower than 9%.
So with defeasance, you would use the proceeds that would have been used to pay off the loan to purchase treasury securities instead? And the proceeds can come from another loan/institution (refinance) or a buyer (sale)?
Check the loan terms. The borrower must reimburse the lender for the lost interest that isn’t covered by the lender’s reinvestment. The lender defines the calculation in the loan documents. To estimate, check out www.defeasewithease.com Hope that helps. - Trevor
Good Sir. Your content is solid and timeless on the subject. Bless you. So, I have searched all of over the internet and all the ai engines available on the internet. I still can’t find a formula for determining the effect of loan fees and points on a gpm. According to the text (by BJ & JF); a 3% origination fee charged on a gpm, repaid after 5 years, yields an effective interest rate of about 12.78% compared to 12.82% for a cpm with the same terms. My challenge is this: despite my efforts, I am unable to show via my calculations how the gpm yields 12.78%. I can, however, calculate and determine how the cpm of same terms yield 12.82%. Your guidance is all I ask. Cheers!
@@RealEstateFinanceAcademy Thanks for responding, Good Sir. I can’t send images here. So I’ll just refer you to page 119; Brueggeman & Fisher (16th edn). Under the heading ‘GPM Loans and Effective Borrowing Costs.’ It was stated that: “…In the GPM discussed above, for example, if 3 points are charged and the loan is repaid after 5 years, the effective rate would be about 12.78% compared with 12.82% on a CPM with same terms.” On this basis, I tried calculating to determine the 12.78% enar, but just can’t seem to arrive at it. Note: I can solve for the initial eoy1 payment of the gpm, the subsequent graduated payments, the loan balances for all the graduated years; this is the last piece of the jigsaw for me. Thanks for your guidance, Good Sir.
@@RealEstateFinanceAcademy Hello good Sir. I am waiting patiently for your feedback. I’d be grateful if you allow the privilege of feedback on the issue. Thank you.
They do a full physical inspection of the entire property and some or all of the units, depending on the size of the property. They also require annual inspections, but they don't always do them if the property is in good shape and it's clear the landlord is maintaining it well. Hope that helps! - Trevor
Many thanks from the UK where I was tearing my hair out trying to calculate market rent using sale price and capitalisation rate only. I pray I get my assignment in on time (please pray for me?...).
I literally asked the question of my course tutor who said 'analyse the market information given'... know this is basic stuff and bet I'll never forget it now.
Hi! Just wanted to tell you, that every time from now on, when I will talk about banks, and credit, I will show your video to the audience!!! Also we have a video from Christy Vann where she tells us how can we do velocity banking - how can we pay our loans faster, AND paying LESS MONEY: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-wObG9btLHh8.html
Not if the points are discounted from the loan amount. Check with your lender. Typically they will pay the points from your loan, so you owe $200k, but they only disburse $194k… BTW, three points is a lot for most loans. Is it a hard-money loan? If it’s a conventional loan, you’re probably being overcharged. Hope that helps! - Trevor
Good question… Typically that is the only option. It’s a “take it or leave it” offer from the lender. but again, it’s inconsequential if the borrower performs as agreed and doesn’t default on the loan. - Trevor
Stood behind the glass facing the camera, written everything normally on the glass from his side, which is backwards for us, flipped the video in editing and uploaded it...
hello my name IS JEAL PAUL ZIRIKANA am in RWANDA country I would LIKE to get skills from your channel and I was hoping you could help me to know how to invest without a loan and my money
So if you already made 50-75% of the payments as schedule.. it will be pointless to start making additional payments or pay it off in full because the bank already got almost all of the interests money off from you?? The point of making extra payments or paying it off early is to reduce the amount of money paid to interests but if the bank almost got the interests money entirely by the halfway or 3/4 mark, might as well just ride out the loan term? Even at the start of the loan, any extra payments i made is being taken to pay interests and the bank doesn't allow any extra payments to go into principal only.
