Unit Measure of Risk

Unit Measure of Risk

The unit measure of risk is an artful combination of many real estate investment attributes including borrower creditworthiness and experience, the investment’s position in the capital structure, the loan-to-value or cost (LTV or LTC) as well as performance metrics like DSCR (debt service coverage ratio) or debt yield, which compares the last dollar basis to either the performance history of the asset or its expected (or proforma modeled) performance, as informed by market research.

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