L3VLUP

Debt Yield

Net operating income divided by the loan amount. The lender’s appraisal-independent test: it does not move when a valuer’s cap rate moves, so it catches an over-levered loan that loan-to-value would pass in a hot market. Commonly floored at 7% to 9%. One of the three constraints a real estate loan is sized to, with LTV and DSCR.

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