Every basis point of coupon comes straight out of the year-one cash flow, and the equity does not change, so the return moves fast. This is what a 50 basis point negotiation is worth on this deal.
| Rate | Annual debt service | Year-one cash flow | Cash-on-cash |
|---|---|---|---|
| 5.50% | $442,875 | $157,125 | 4.25% |
| 6.00% | $467,649 | $132,351 | 3.58% |
| 6.50%This scenario | $493,013 | $106,987 | 2.89% |
| 7.00% | $518,936 | $81,064 | 2.19% |
| 7.50% | $545,387 | $54,613 | 1.48% |
Year-one, pre-tax, and before capital expenditure, on the standard amortizing payment. The denominator here is price less loan plus closing costs; a real sources-and-uses adds financing costs, funded capital, and initial reserves, every one of which lowers the reported return. Principal paydown, appreciation, taxes, and the sale are not in this number at all.
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Cash-on-cash is one year of one scenario. A real underwriting builds the NOI from the rent roll and the T-12, runs every year of the hold, and reports the levered IRR and the after-tax version beside it. Altyst reads the documents and builds all of it.