BUILD AN INVESTMENT ANALYSIS INCOME STATEMENT FOR REAL ESTATE

These are the assumptions that you need to use to build your investment analysis income statement.

Commercial Property

Leasable Space = 300,000 sq ft

Cap Expenditures =20% of Effective Gross Income

Average Annual Rent = $17.00/sq ft

LTV = 80%

Average Annual Rent Grwth = 2.5%/year

Loan Interest Rate = 6%

V&C Losses = 8% of Potential Gross Income

Amortization = 30 yrs

Operating Expenses = 35% of Effective Gross Income %

Bldg/Total Value = 75%

Miscellaneous Income = $1.50/sq ft

Corporate Tax Rate = 30%

Misc. Income Annual Growth = 2%/year

Cap Gains Tax Rate = 15%

Going-out Cap Rate = 10.5%

Accum Dep Tax Rate = 25%

Discount Rate = 10%

Years of Ownership = 5 years

Selling Expenses = 6%

Purchase Price = $22.5M

Introduction Recall that the real estate income statement looks as follows: PGI Potential gross income VCL Vacancy and collection losses Miscellaneous income +MI Effective gross income EGI Operating expenses OE NOI Net operating income CAPX Capital expenditures Property-level cash flow PLCF