All Forum Posts by: Jay Mani

This is speculative. But would you do a deal where 80% LTV @10.5% for 15 years.
The property is in a high growth international market - 15% annually. No cashflow since this would be under-construction.

How should i evaluate such opportunities - cash on cash?

Firstly, I'm a rank amateur but have been fiddling with spreadsheets to no avail. Please forgive any dumb questions.

I'm trying to invest overseas in a hot RE market. The properties in question is under construction - i.e no cashflows. Expected conservative estimate is for property value to 2x in 5 years (15% irr?)

There are 3 scenarios -

1. Invest 100K in bank at 8.5%
2. Invest in a 500K property at 80% ltv at 10.5% for 15 years
3. Invest in the same 500K property with cash (no leverage)

(PS: Im not factoring in the fact that for under construction properties, you pay in part as per the stage of construction)

Questions -
1. Which is the smart investment and why?
2. What metric should i use to compare these investments?
3. How do i factor in opportunity cost?
4. How do i compare leverage vs unleveraged returns? Whats the best way to think about it?