What is the primary characteristic of debt capital in real estate?

The primary characteristic of debt capital in real estate is that it is paid back in fixed installments on a fixed schedule. This means that borrowers receive a specific amount of money, and they are obligated to repay that amount, typically with interest, according to a pre-determined payment plan. This structure provides predictability and stability for both the lender and the borrower.

For lenders, knowing when and how much will be repaid allows them to manage their cash flows and assess risk effectively. For borrowers, the fixed payments help in budgeting and financial planning. This characteristic distinguishes debt capital from equity capital, where returns are often tied to the performance of the asset rather than a guaranteed repayment schedule. The reliance on fixed installments is a fundamental aspect of how debt financing operates, making it a crucial concept in real estate finance.