Robert Schmidt

What You Should Know About Nominal and Effective Interest Rates

Interpreting interest rates is not always as straightforward as it seems and getting it right can have important implications for all parties involved in a commercial real estate transaction.  Interest rates can take two forms: nominal interest rates and effective interest rates.  As a result, there can be some confusion about what a quoted interest …

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How the Sources and Uses Statement Works

The sources and uses statement is important to understand in commercial real estate transactions. Yet, there is often a lot of confusion around what a sources and uses statement is and why it is needed. In this short article, we’ll take a look at the sources and uses statement, discuss how it is used in …

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Real Estate Waterfall Models: What You Should Know

Equity waterfall models in commercial real estate projects are one of the most difficult concepts to understand in all of real estate finance. Cash flow from a development or investment project can be split in a countless number of ways, which is part of the reason why real estate waterfall models can be so confusing. …

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How to Calculate The Debt Yield Ratio

The debt yield is becoming an increasingly important ratio in commercial real estate lending. Traditionally, lenders have used the loan to value ratio and the debt service coverage ratio to underwrite a commercial real estate loan. Now the debt yield is used by some lenders as an additional underwriting ratio. However, since it’s not widely used …

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How to Calculate The Debt Service Coverage Ratio (DSCR)

The Debt Service Coverage Ratio, often abbreviated as “DSCR”, is an important concept in real estate finance and commercial lending. It’s critical when underwriting commercial real estate and business loans as well as tenant financials, and it is a key part in determining the maximum loan amount. In this article we’ll take a deep dive …

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How to Use The Modified Internal Rate of Return (MIRR)

The Modified Internal Rate of Return, often just called the MIRR, is a powerful and frequently used investment performance indicator. Yet, it’s commonly misunderstood by many finance and commercial real estate professionals. In this post we’ll take a deep dive into the concept of the MIRR. We’ll define the MIRR, look at the logic and intuition …

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Net Present Value (NPV): What You Should Know

The Net Present Value (NPV) is one of the most important and widely used concepts in finance and commercial real estate. In this article you’ll learn: What is NPV NPV Formula NPV Meaning NPV Decision Rule NPV Discount Rate How to Calculate NPV How to Calculate NPV in Excel What Is Net Present Value (NPV)? …

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How To Use an HP 10BII Financial Calculator

In finance and commercial real estate it’s simply expected that you know how to use a financial calculator. Yet, it’s surprising how many commercial real estate and finance professionals still don’t know how to properly use a financial calculator. Sometimes it’s because they didn’t learn it correctly the first time, and other times it’s because they …

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The Difference Between Recourse and Non-Recourse Loans

What’s the difference between a recourse and a non-recourse loan? In commercial real estate both types of loans are common depending on the stage and type of financing. In this short article we’ll take a closer look at commercial real estate loans, and specifically the difference between recourse and non-recourse commercial real estate loans, as …

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Triple Net Lease: What You Should Know

In commercial real estate a common lease structure is the triple net lease, often abbreviated as “NNN Lease”. Despite its popularity the triple net lease structure is still commonly misunderstood. In this article we’ll take a deep dive into the triple net lease and cover: What is a Triple Net Lease (NNN)? Triple Net Lease …

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