Question
1. Use the following facts about a 30-unit apartment investment to answer the next 4 questions: Monthly rent per unit $700 Operating expenses $78,000 Vacancy
1. Use the following facts about a 30-unit apartment investment to answer the next 4 questions:
| Monthly rent per unit | $700 |
| Operating expenses | $78,000 |
| Vacancy rate | 5% |
| Asking price | $1,690,000 |
| Land value | $ 398,000 |
| Overall capitalization rate | 11% |
| Financing: | FRM 10%, 20 years; 1% Origination fee; 2 points |
The lender is willing to finance up to 75% of the asking price. The investor, who manages the property, is in the 28% tax bracket.
1. . What is the before tax cash flow?
2. What is the operating expense ratio?
3. What is the debt coverage ratio?
4. What is the break-even ratio?
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
