The development spread is a back of the envelope calculation widely used by real estate developers. It is a fast and easy way to size up the financial feasibility of a real estate development project, prior to completing a more in depth analysis. In this article we’ll take a closer look at the development spread and walk through an example of how it is used in practice. What is the Development …
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Understanding the Texas Ratio
The retail banking system operates on a fundamental promise between the bank and the customer. The customer opens an account and deposits money in it with the expectation that the bank will continue to stay in business and that the funds will be available for withdrawal when needed. But, history tells us that this isn’t always the case. Throughout history, there is a long list of notable bank …
Understanding the Construction Draw Schedule
In some ways, a commercial real estate construction project is just like any other project. There is a start date, several interim milestones, and an end date when the property is complete and a certificate of occupancy has been issued. However, a commercial real estate construction loan is not like other loans. It is distinguished by the fact that the loan balance starts at $0 and rises over time …
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