Optimal Leverage in Real Estate Investment
Posted: 18 Nov 1999
This article is a theoretical examination of optimal financial leverage for real estate investment in the presence of uncertainty. The main results is to show 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 calcualtions for both borrower and lender.
JEL Classification: R29, R39
Suggested Citation: Suggested Citation