B.E.R. in Lending

B.E.R. in Lending

The break even ratio (BER) is a calculation routinely used by lenders. The BER is expressed as a percentage; this percentage is used by lenders to decide whether or not to underwrite a loan for a particular piece of rental income property.

First, debt services and operating expenses are totaled. That number is then divided by the gross operating income. The lower the percentage's, the better.

The cash break even ratio is also commonly referred to as the “default ratio.” JV

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Thanks Coach

Good to know this......very helpful for borrowers also........Smiling

Reagards,

Sharon

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Life Hands You Lemons.......Make Lemonade......

It was once said, “religion is designed to comfort the afflicted and to afflict the comfortable.”


Great subject

There are a couple of great books related to the subject! The wealthy code and the bankers code!

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B.E.R. in Lending

In case you’re a beginning investor or you’ve been investing in property for a long time, calculating your potential income never loses its charm. Calculating risk might not be as fun as calculating income, but it’s every bit as essential. There are a number of calculations designed to factor risk in property investing.

The equation for the break-even ratio looks like this:

(Annual mortgage repayments + Operating expenses) / Gross Operating Income =
Break-even ratio


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