impact of loan rates on direct real estate investment holding period return, The

Financial Services Review, Summer 2004 by Larsen, James E

7. Of course, if rates have increased, the second investor may be requiring a higher rate of return.

8. This effect is also positively related to the original investor's LTV ratio. The effect is also influenced by the LTV employed by the subsequent investor, the subsequent investor's required rate of return, and the proportion of debt service to total cash Row for both investors.

References

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Gau, G. W., & Wang, K. (1994). The tax-induced holding period returns of real estate investors: Theory and evidence. Journal of Real Estate Finance and Economics, 8, 71-85.

Ma, C. (1990). Mean reversion in GNMA returns. American Real Estate and Urban Economics Association Journal, 18, 207-226.

Sarkar, S. (2003). The effect of mean reversion on investment under uncertainty. Journal of Economic Dynamics and Control, 26, 377-396.

Seiler, M. J., Webb, J. K., & Myer, F. C. N. (1999). Diversification issues in real estate investment. Journal of Real Estate Literature, 7, 163 -179.

Simians, C. R, & Worzala, E. (2003). International direct real estate investment: A review of the literature. Urban Studies, 40. 1081-1114.

Wu, Y., & Zhang, H. (1996). Mean reversion in interest rates: New evidence from a panel of OECD countries. Money, Credit and Hanking, 28, 604-621.

James E. Larsen

Department of Finance and Financial Services, Raj Soin College of Business, Wright Stale University, Dayton, OH 45435, USA

Received November 2003; accepted February 2004

*Tel.: 1-937-775-2870; fax: 1-937-775-3545.

E-mail address: James.larsen@wright.edu.