Optimal Leverage in Real Estate Investment

John McDonald

The Journal of Real Estate Finance and Economics, 1999, vol. 18, issue 2, 239-52

Abstract: This article is a theoretical examination of optimal financial leverage for real estate investment in the presence of uncertainty. The main result shows that uncertainty creates the possibility that a borrower will default on a real estate loan and that this possibility is the underlying factor in optimal leverage calculations for both borrower and lender. Copyright 1999 by Kluwer Academic Publishers

Date: 1999
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