1 \begin{tabular}{l|l|l|l|l|l|l|l} A & B & C & D & E & F & G & H \end{tabular} 2 You are considering the purchase of an apartment complex. 3 The following assumptions are made: 4 5 The purchase price is $2,000,000 6 There are 30 units and the market rent is $850 /month 7 Market rents are expected to increase 4% per year 8 Vacancy and collection loss is 10% 9 Real Estate Taxes are expected to be $20,000 in year 1 and increase 5% per year 10 Insurance is expected to be $10,000 in year 1 and increase 7% per year 11 Utilities are expected to be 9% of EG each year 12 Repairs and Maintenance costs are expected to be 7% of EGI each year 13 Grounds and Security costs are expected to by 6% of EGI each year 14 The market value of the investment is expected to increase 6% each year 15 Selling expenses will be 5% 16 The holding period is 5 years 1780% of the purchase price can be borrowed on a 30-year, monthly payment mortgage 18 The annual interest rate on the loan will be 8%. 19 Loan origination fees will be 1% of the loan amount (paid in the year the loan is taken out - Year 0) 20 There are no prepayment penalties if you pay the loan early. 21 Tenant Improvements are expected to be $3,000 /year 22 Leasing Commissions are expected to be $1,000 /year 23 A roof repair totaling $15,000 will be completed in year 3 24 The required rate of return for the investor is 12%. 25 Assume taxes are 30% of BTCF. 26 27 Assignment: 28 Fill out the income statement. 29 Calculate the monthly mortgage payment to find debt service. 30 What is the IRR and NPV of the property? (CF0 = equity investment + loan origination fees) 31 Calculate the ratios for one or five years as indicated on the worksheet 32 To find the mortgage balance, principal and interest payments: 33 Enter key strokes to find payment on the loan Enter 2nd Amort P1=1 enter, down arrow P2 = 12 enter, down arrow Balance of loan, principal and interest is displayed For year 2, P113 enter, down arrow P2=24 enter, down arrow Balance of loan, principal and interest is displayed 44 1 \begin{tabular}{l|l|l|l|l|l|l|l} A & B & C & D & E & F & G & H \end{tabular} 2 You are considering the purchase of an apartment complex. 3 The following assumptions are made: 4 5 The purchase price is $2,000,000 6 There are 30 units and the market rent is $850 /month 7 Market rents are expected to increase 4% per year 8 Vacancy and collection loss is 10% 9 Real Estate Taxes are expected to be $20,000 in year 1 and increase 5% per year 10 Insurance is expected to be $10,000 in year 1 and increase 7% per year 11 Utilities are expected to be 9% of EG each year 12 Repairs and Maintenance costs are expected to be 7% of EGI each year 13 Grounds and Security costs are expected to by 6% of EGI each year 14 The market value of the investment is expected to increase 6% each year 15 Selling expenses will be 5% 16 The holding period is 5 years 1780% of the purchase price can be borrowed on a 30-year, monthly payment mortgage 18 The annual interest rate on the loan will be 8%. 19 Loan origination fees will be 1% of the loan amount (paid in the year the loan is taken out - Year 0) 20 There are no prepayment penalties if you pay the loan early. 21 Tenant Improvements are expected to be $3,000 /year 22 Leasing Commissions are expected to be $1,000 /year 23 A roof repair totaling $15,000 will be completed in year 3 24 The required rate of return for the investor is 12%. 25 Assume taxes are 30% of BTCF. 26 27 Assignment: 28 Fill out the income statement. 29 Calculate the monthly mortgage payment to find debt service. 30 What is the IRR and NPV of the property? (CF0 = equity investment + loan origination fees) 31 Calculate the ratios for one or five years as indicated on the worksheet 32 To find the mortgage balance, principal and interest payments: 33 Enter key strokes to find payment on the loan Enter 2nd Amort P1=1 enter, down arrow P2 = 12 enter, down arrow Balance of loan, principal and interest is displayed For year 2, P113 enter, down arrow P2=24 enter, down arrow Balance of loan, principal and interest is displayed 44