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Loans and real estate

Seven lessons on how commercial real estate loans are sized and judged: net operating income, cap rates and value, LTV and DSCR, debt yield, amortization and balloons, bridge and permanent loans, and mezzanine debt and covenants. Each lesson ends with desk scenarios: work out the numbers and make the call on a deal.

  1. Net operating income

    What a property earns before the loan: rent, vacancy, other income and operating expenses, and what's left out.

    6 questions

  2. Cap rates and value

    The capitalisation rate, valuing a property from its income, and why a small change in cap rate moves value a lot.

    6 questions

  3. LTV and DSCR

    The two tests every loan has to pass: how much of the value is borrowed, and how well the income covers the payments.

    6 questions

  4. Debt yield and loan sizing

    The test that ignores interest rates and cap rates, and sizing a loan by all three tests.

    6 questions

  5. Amortization and payments

    How a loan payment is worked out, how much goes to interest, interest-only periods and balloon payments.

    6 questions

  6. Bridge and permanent loans

    Short, flexible loans for properties in transition, long fixed-rate loans for stable ones, and the costs of each.

    6 questions

  7. Mezzanine debt and covenants

    The capital stack, mezzanine loans and preferred equity, and the promises in a loan that trigger action when numbers slip.

    6 questions
More info

How it works

Each lesson is a short read with examples, then a few practice questions. Some ask you to type an answer (a number, an address, what a piece of code prints), some have you pick one, and some have you tap steps or lines into the right order. You can try again as often as you like; after two misses there’s a button to show the answer.

What do I need to know first?

Nothing beyond percentages and a calculator. The few code examples are short Python that shows the arithmetic; you only need to read them.

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Where is my progress saved? In this browser, like the rest of the site. Nothing to sign up for.

“Python” is a registered trademark of the Python Software Foundation. This course isn’t made by or affiliated with it.

For learning only, not financial, legal or investment advice. The limits in the examples (LTV, DSCR, debt yield) are typical figures, not any lender’s; real ones vary by lender, property type, market and time.