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A quick description of Net Operating Income, Capitalization Rate, and Price – What they are, how they interact with each other, how to use them, etc. If I ha…

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www.privatemoneyusa.com A lot of times you will hear people talk about CAP rates in commercial lending. When I first started doing commercial, I didn’t understand it and asked a bunch of lender reps. Very few lender reps even understood it. They just had a basic idea. But I assure you, underwriters know about CAP rates — and if you want to close a lot of commercial loans, you better know about it as well. The CAP rate; or capitalization rate, is the relationship of the net operating income (NOI) of the property divided by the sales price or appraised value. So a property with $200K of NOI that sold for $2 Mill, sold at a 10 CAP — (200000 divided by 2 mill). Now, while CAP rates may vary some by city and property type, a general idea of CAP rates will help you screen out deals that don’t make sense. Knowing the CAP rates can help you estimate the real value of the property you are looking at financing and this can help you determine whether it is even a viable deal. Generally, I can come within $100000 on the appraised value on a property just by knowing the CAP rates and doing a simple calculation. Most listing flyers and many borrowers think their property is worth a 7 CAP. No lender in America will give someone a 7 CAP on a property in 2011. In 2007, average pricing was a 7 CAP and in some places like California, you were even seeing 5.5% CAP which is crazy. A property barely cash flows at that CAP rate. Today, 10 CAP is the safest number to use when underwriting and

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I was raised in Thibodaux, LA and am currently reside in CA. I would like to go back to Louisiana and invest commercial/office real estate in the French Quarter area of New Orleans. Can someone from that area give me some helpful advice? Would Baton Rouge be a better investment area?

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Vietnam GDP growth quickens on bank lending
Vietnam’s economic growth accelerated in the second quarter as revived bank lending helped boost manufacturing and consumer spending.

Read more on Thanh Nien Daily

Commercial Mortgage Borrowers Fail to Retire Debts Even as Lending Rises
More than half of commercial mortgages bundled and sold as bonds have been unable to pay off maturing debt this year even as the availability of financing increases, according to Bank of America Corp.

Read more on Bloomberg

Beijing’s ICBC to enter U.S. real estate lending
Industrial & Commercial Bank of China is plans to offer loans of more than $100 million to commercial clients, according to a published report.

Read more on Market Watch

Currency Buying Rate Selling Rate
Bahrain Dinar 301.08 Kuwait Dinar 390.65 Oman Rial 294.89 Qatar Riyal 31.18 Saudi Arabia Riyal 30.26 UAE Dirham 30.90 (3) The Average Weighted Prime Lending Rate (AWPLR) and the Lowest Prime Rate (LPR) during the week ended 24th June, 2010 by all commercial banks was 10.38 percent and 9.00 percent respectively. (4) The Average Weighted Deposit Rate (AWDR) of commercial banks, for the month of …

Read more on Daily News

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