Figuring out my annual debt service

12 Replies

Hello I’m new to bigger pockets and Multifamily investing. I’m having trouble on how to figure out my annual debt service or yearly mortgage payments.

Ex... $6,000,000 purchase price with a 25% down payment of $1,500,000. At 6.5% interest rate on the remaining balance of $4,500,000 for 30 years loan. Do I multiply 6.5% of the $4,500,000? I get stuck at this part!!

Thanks, D.Harris

@Dexter Harris Welcome to BP! This is the best place to learn. To keep it simple, there is plenty of technology available to help with this. First you have the BP calculators, which are well worth the price of the Pro membership to be able to use as much as you need. But you can also download free apps on your phone that will run the calculations for you. Or you can also get an amortization schedule on Excel. However your preferred method to avoid any manual errors. In your scenario you would have a monthly payment approximately at $28,443. However there are commercial lenders available that can do lower than 6.5% and do 30 years, possibly even fixed depending on some variables.

@Dexter Harris , I just recently started taking a class to get my commercial real estate designation and one of the things I got with my payment for the class was a pretty awesome excel sheet "calculator" that helps me figure that all out.  

I have had multiple requests on sending it to folks and I have no problem doing so (assuming I get permission since its not mine, but i did pay for it), I could share with you as well if you want.  I was also thinking about doing a zoom call because its a pretty intense calculator to use and shows future values, internal rates of returns, cash on cash, etc.  

Let me know if it would help

@Dexter Harris

google is your friend, it can teach you how to do all this and more in Excel. If you are serious about REI, then having the skills to do these calculations yourself is vital. In the end using someone else's template will hurt you.

To answer your question, the monthly payment is $28,433

The Excel formula to arrive at that number is =PMT(0.065/12,30*12,4500000)

.065/12 is the rate you pay per month

12*30 is the number of monthly payment (AKA number of periods or NPER)

4,500,000 is the loan amount (AKA Present Value or PV)

Good Luck

@Dexter Harris - You can easily download a mortgage calculator app on your cell phone too. I like to use Karl's Mortgage Calculator (on my Samsung Droid).

If you want to simply calculate interest only, the math is $4,500,000 X 6.5% (.065) / 12 = $24,375 interest only payments. If you want the amortized principle and interest payment, simply use a mortgage calculator. In this case, for a 30 year loan, it would be $28,443.06

Keep in mind that you should be able to do better than 6.5% with today's rates.