1. Use the information provided below to estimate the market value of the apartment building that has been described using the direct capitalization approach.
Type of Property: Number of Units: Average Rent: Vacancy and Collection losses: Other Income: Operating Expenses: Capital Expenditures: Going-In Cap Rate:
Apartment Building 25 $1,000 per unit per month 10% of potential gross income 520 per unit per month 40% of effective gross income 3% of effective gross income 5.5%
2. Suppose you are trying to determine the value of a Class A office building that is expected to have $2.5 million in NOl over the next year. Another Class A office building just sold for $37.5 MM It had expected NOl of $3 million over the next year. Using the "cap rate" method, what is the appraised value of the subject property?