What is the cap rate used by lenders in Cincinnati, Ohio

In Buying Property - Asked by greg c. - Aug 7, 2009
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Answer(s)

Paul S.
Broker/Agent
Glendora, CA

A lender will not probably use a cap rate but rather a DCR (debt coverage ratio). Most lenders are going to want it to be a minimum of 1.25. The amortization period and the interest rate on the loan will cause the net income required to meet the DCR to change. The cap itself won't change but the cap it takes to meet the DCR requirement will, or the downpayment required will change. Keep in mind the cap is merely a reflection of the income relative to the price ( NOI/Price=Cap). If you pay say 100,000 and the cap is 6% the NOI is $6000 or 500 per month . 35% down would be a 65K loan at say 7% amortized 25 years= 460 per month. 500/460=1.09
DCR which would not meet the 1.25 minimum. Either the down would need to be increased or the property purchashed at a lower price (higher cap) thereby lowering the loan amount.
pstoski@yahoo.com
Paul Sylvester, CCIM

Aug 7, 2009
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Andres G.
Owner/Investor
Miami Beach, FL

Ohio is widely considered a depressed Real Estate Market. Depending on the asset type you can expect a best case scenario of over 9% for Multifamily and higher for other asset types with a higher perceived risk.
agarcia@citysideinvestments.com

Aug 10, 2009
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Adam K.
Lender/Mortgage Broker
Deerfield, IL

This all depends on the type of property and lender. Let me know what type of property and location within cincy and I might be able ot assist you. Send me an e-mail with the info aklingher@mfloan.com

Aug 11, 2009
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Gregory G.
Broker/Agent
San Francisco, CA

Are you possibly referring to the debt coverage ratio rather than the crap rate?

Aug 13, 2009
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