Figuring out my annual debt service
12 Replies
Dexter Harris
Rental Property Investor from Los Angeles, CA
posted about 1 year ago
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
Don Spafford
Investor from Idaho Falls, ID
replied about 1 year ago
@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.
John Thedford
Real Estate Broker from Naples, FL
replied about 1 year ago
Go to bankrate.com
They have amortization schedules.
Dexter Harris
Rental Property Investor from Los Angeles, CA
replied about 1 year ago
Thanks
Dexter Harris
Rental Property Investor from Los Angeles, CA
replied about 1 year ago
Thanks
Mike Higgins
Rental Property Investor from Green Bay, Wisconsin
replied about 1 year ago
@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
Bill F.
Rental Property Investor from Boston, MA
replied about 1 year ago
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
Will Barnard
(Moderator) -
Developer from Santa Clarita, CA
replied about 1 year ago
@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.
Hai Loc
Specialist from Toronto, Ontario
replied about 1 year ago
Download Karl Mortgage Calculator
Dexter Harris
Rental Property Investor from Los Angeles, CA
replied about 1 year ago
Thanks this was just an example I have from this workbook and that is one of the problems.
Dexter Harris
Rental Property Investor from Los Angeles, CA
replied about 1 year ago
Thanks bill for your help and formula
Tj Hines
Specialist from Tampa, FL
replied about 1 year ago
@Dexter Harris there are quite a few calculators out there you can use to help you determine this. We use Michael Blanks SDA analyzer to help with our assumptions. Good luck
John Bianco
Specialist from New York, NY
replied about 1 year ago
I hope 6.5% is just an example! Seems high in today's market