1.A 20-unit apartment complex has eight one-bedroom units that rent for $1,200 per month and 12 two-bedroom units that rent for $1,600 per month.

How much rental income will the complex generate per month if all of the units are occupied?

2.Assuming the 20 units remain fully occupied for the entire year, what is the annual potential gross income of the property?

3.Market evidence and published reports show that each unit is vacant, on average, about one half month per year.What would the annual vacancy rate be if this is true?

4.If the actual vacancy factor is 6% for the year, what is the effective gross income for the property?(Potential gross income less vacancy is effective gross income).

5.The property owner provides you with his annual expense statements for the last year.They are as follows:

aAuto Expenses$700

bMeals and Entertainment$621

cTravel$947

dProperty Taxes$2,789

eBuilding Insurance$,3,229

fBuilding Maintenance Contract$4,227

gProperty Management Expense$2,117

hMiscellaneous Property Expenses$829

Which of these expenses do you feel apply to the operating expenses of the property?

What is the total amount of these expenses from this year?

6.If the total operating expenses for this property are reported to be 44% of effective gross income, what would that figure be?

7.A fully leased 22,000 square-foot industrial building generates $12 per square foot in rental income on a triple net basis.Vacancy in this market segment is 10%.What is the effective gross income of the property?

8.Since it is a triple net lease, the only operating expense that the owner reports is an annual reserve for replacements of $4,400 and a miscellaneous expense of $2,600.What is the net operating income of this property?

9.Overall rates seen in the market recently from comparable industrial buildings fall within a range of 6% and 6.5%.Applying these two ends of the range to the above calculated NOI leads to a value range of:

10.If the overall rate can be narrowed down to 6.4%, what is the final indicated value of this property?

11.If one of the tenants leasing the building is a national credit tenant, what would be the more likely direction of the overall rate for this property relative to the market?

12.So what impact will that have on the estimated value of this property?