File this under, “no dumb questions” please but when but taking the often used 1M park purchase as an example, I’m hoping someone can help me understand the debt service in relation to the three-point spread.
1M purchase price at 8% cap
800k at 5% = 40k year
CoC 40k/200k = 20%
So my question is what about the principal on the loan? How do you best model this (what assumptions should I be conservatively making?) Are buyers seeing amortization schedules of 20, 25 years?