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Loan-to-cost ratio
The first and most important underwriting test is the loan-to-cost ratio.  You should add the acquisition cost to the cost of the improvements, any future leasing commissions, any legal fees, any entitlement fees, the financing costs, an interest reserve, and a contingency reserve of about 5% of the total project cost.  Together these figures will equal the total cost of the project.   ... more

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