Notice: This curriculum is unavailable until further notice while Risk Management Association (RMA) implements content modifications. Please check back periodically for updates.
Learn how to identify a company’s net operating income (NOI) or cash flow, and analyze the project and proposed loan. Capitalization rates and valuation basics are also introduced, as well as the appraisal process and identifying best practices regarding environmental assessments.
Produced by the Risk Management AssociationCRE-LDP 2.1 – Underwriting BasicsCRE-LDP 2.2 – Collateral Valuation Considerations
*Only available as a series
What You’ll LearnIdentify the components of CRE quantitative analysis, including gross lease income, vacancy, operating expenses, and net operating income (NOI)Identify underwriting guidelines for your own bankConstruct a basic income property cash flow using the components of CRE analysisEvaluate loan repayment sources using the DSC ratio, capitalization rates and valuation, and the LTV ratioConduct a stress test of DSC for potentially lower cash flow and higher interest rates and of LTV for potentially higher CAP rates.Explore changes in property variables on an individual basis using sensitivity analysisExplain the role and function of capitalization ratesCompare and contrast the direct capitalization valuation approach with the discounted cash flow approachIdentify the key steps in ordering and reviewing appraisalsExplain the rules and regulations regarding appraisals that lenders must followDefine and describe the types of CRE appraisals and their componentsIdentify the key steps and issues involved in ordering and reviewing environmental assessmentsDescribe the rules and guidelines for Phase I environmental reportsIdentify and describe the types of environmental risk management tools
After completing this series, students will be able to: