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A Purdue janitor with an IU PhD is evaluating a 4 plex just off campus. He wants to know what the value of the property
A Purdue janitor with an IU PhD is evaluating a 4 plex just off campus. He wants to know what the value of the property is using the cap rate method.
Details:
o Rent is $750/month/unit
o Vacancy of the area is 10%
o Real estate taxes are $1,000/unit/year
o Utilities are $400/unit/year
o Variable expenses are $2,500/unit/year
o Interest on a $100,000 loan is 7%
o Cap rate is 10% on an investment of this type
What is the value of the investment?
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