Trying to figure out how best to Pro-Forma Debt Payment

[Eric Grunfeld]

Hello:

I am currently looking at apartment buildings in Phoenix (5 or more units).

How best to forecast one's debt payment?

What is the best number for one's amortization term? (ex. 10 years)

And what annual interest rate would you use (considering what has been happening with rates)

Again this does not have to be exact but something to start the valuation process.

I look forward to your thoughts.

All the best,

Eric

[Evan Polaski]

@Eric Grunfeld it depends on where you are in process.  If you have a property under contract, you give them that info and info on yourself.  

If you are just reviewing properties at the moment, you talk to a few and ask them what they general terms are for the type of properties you are looking at. I.e. if you are buying 4 families, through an LLC and do not want any personal mortgages. Most commercial loan brokers can give you general ballparks. Some may be 70% LTV, 5 yr term on 20 yr am at 5.25%. Some may be 80% LTV 30 yr fixed, fully amortizing at 6%, etc.

The point being: call around and ask. just know that what you can get in your personal name is often different than terms for a commercial mortgage in an LLC. And a 1-4 unit is different than a 5+ unit.