Question
Bob buys a property that costs $5,000,000. Year NOI 1 $300,000 2 $315,000 3 $330,000 Bob will own the property for two years. The NOI
Bob buys a property that costs $5,000,000.
| Year | NOI |
| 1 | $300,000 |
| 2 | $315,000 |
| 3 | $330,000 |
Bob will own the property for two years.
The NOI from the property for years 1-3 is to the right:
Bob will sell the property at the end of year 2 at a cap rate that is 50 basis points lower than the cap rate at which he bought the property.
Assume Bob finances his purchase with a 50% LTV Fixed Rate IO loan at an annual rate of 5% with annual compounding and annual payments. What is Bobs annualized IRR for the investment in question?
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Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes
11th edition
9781259278617, 77861647, 1259278611, 978-0077861643
