Question
A real estate firm has recently acquired a new property investment from another firm. The real estate firm wants to see how much value this
A real estate firm has recently acquired a new property investment from another firm. The real estate firm wants to see how much value this property has.
The property information is the following: the property was bought for $3,250,000. The rent is $155,000. Taxes on the property is $15,000. The Utilities cost is $3,000. Management of the property cost $2,500. Maintenance of the property cost $2,500. Seasonal weather issues (i.e. snow, floods, etc.) cost $1,200. Repairs on the property cost $6,500. General Liability Insurance cost $6,000. The Net Operating Income (NOI) is $138,574
Given all these factors:
1. Calculate the cash on cash return
2. Calculate the CAP rate
3. Calculate the maximum loan size
(Please show work and explanation. Would really appreciate it.)
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