13. Calculate the Pre-Tax Cash Flow, Net Present Value (NPV) and Internal Rate of Return (IRR) 30,000 $175 $34 5% SF psf psf $5,250,000 Total Appraised Value Land Cost $1,027,500 Year 1 Potential Gross R Construction Financing $1,000,000 100% Building Size Construction Costs Rent Vacancy Factor Holding Period Rent & Expenses Escalation equals Appraised Value Loan-To-Cost (LTC) 10 years per year beginning year 2 3% Take Out Financing 0.8 LTV--Land + Construction Interest Rate 5.25% per year 0.44% per month Full Amortization over 20 years 240 months Developer pays cash for portion of loan not covered by LTV Year 1 Operating Expenses Property Management Property Taxes Property Insurance Property Maintenance 3.5% $4 $1 $2.45 of Potential Gross Rent psf/year psf/year psf/year $127,500 $30,000 $73,500 Property Sale @ End of Yea Gross Rent Multiplier (GRN Discount Rate 10 9 5.25% Years 9 10 Equity Contribution -$1,000,000 Potential Gross Rent Less Vacancy Effective Gross Rent Less Operating Expenses Property Management Property Taxes Property Insurance Property Maintenance Net Operating Income Less Debt Service Pre-tax Rental Cash Flow Sale of Property Gross Sale Proceeds Less Loan Payoff Net Sale Proceeds Pre-Tax Cash Flow Net Present Value (NPV) = Internal Rate of Return (IRR) = Pre-Tax Pre-Tax 13. Calculate the Pre-Tax Cash Flow, Net Present Value (NPV) and Internal Rate of Return (IRR) 30,000 $175 $34 5% SF psf psf $5,250,000 Total Appraised Value Land Cost $1,027,500 Year 1 Potential Gross R Construction Financing $1,000,000 100% Building Size Construction Costs Rent Vacancy Factor Holding Period Rent & Expenses Escalation equals Appraised Value Loan-To-Cost (LTC) 10 years per year beginning year 2 3% Take Out Financing 0.8 LTV--Land + Construction Interest Rate 5.25% per year 0.44% per month Full Amortization over 20 years 240 months Developer pays cash for portion of loan not covered by LTV Year 1 Operating Expenses Property Management Property Taxes Property Insurance Property Maintenance 3.5% $4 $1 $2.45 of Potential Gross Rent psf/year psf/year psf/year $127,500 $30,000 $73,500 Property Sale @ End of Yea Gross Rent Multiplier (GRN Discount Rate 10 9 5.25% Years 9 10 Equity Contribution -$1,000,000 Potential Gross Rent Less Vacancy Effective Gross Rent Less Operating Expenses Property Management Property Taxes Property Insurance Property Maintenance Net Operating Income Less Debt Service Pre-tax Rental Cash Flow Sale of Property Gross Sale Proceeds Less Loan Payoff Net Sale Proceeds Pre-Tax Cash Flow Net Present Value (NPV) = Internal Rate of Return (IRR) = Pre-Tax Pre-Tax
