IDEAS home Printed from https://ideas.repec.org/a/ids/ijepee/v11y2018i3p228-237.html
   My bibliography  Save this article

Determining the lowest loan-to-value ratio on commercial real estate investment

Author

Listed:
  • Jeng-Hsiang Lin

Abstract

This study develops a reliability-based decision-making procedure for determining the lowest loan-to-value (LTV) ratio on a commercial real estate investment in seismically active regions. The decision-making of investment is based on two criteria including required rate of return and reliability of return on investment, set by the investor. The uncertainties induced by economic fluctuation of rent market of real estate and random repair cost due to earthquake-induced damages were addressed in this study. Based on the Monte Carlo (MC) simulation technique, a sampling process was repeatedly performed to construct relation curves of LTV ratio versus reliability of required rate of return for various interest rates. These curves can be used as a tool to determine the lowest LTV ratio acceptable under the two criteria set by the investor. An example case is presented to illustrate the decision-making process.

Suggested Citation

  • Jeng-Hsiang Lin, 2018. "Determining the lowest loan-to-value ratio on commercial real estate investment," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 11(3), pages 228-237.
    • Handle: RePEc:ids:ijepee:v:11:y:2018:i:3:p:228-237
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=93945
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijepee:v:11:y:2018:i:3:p:228-237. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=219 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.