Given Scenario: !!!!!!!!!!!!!!!I am looking for help on #5!!!!!!!!!!!!!!!!!!!!!!!

20 apartments that rent for $1000 per month each

5% Vacancy rate

Expenses: Variable expense ratio of 20% of effective rent plus fixed expenses (not including mortgage) of $22,400

Interest: 5%

Monthly Debt Service $9900

REQUIRED:

1. Calculate the NOI.

$12,400

2. Identify the Sales price based on the following capitalization rates:

a. 8% = $155,000

b. 10% = $124,000

c. 12% = $103,333.33

d. Which is better for the buyer? The seller?

For the buyer the higher cap rate is better at 12% whereas the seller would benefit and prefer a lower cap rate at the 8%.

3. Identify the break-even point in rent? Units?

28 units or $28,000

4. If the above complex is purchased for the price in answer 1 A, and the bank will loan based on a 75% LTV, how much must the buyer invest?

$38,750

5. What is the first year ROI based on Net Cash flow before depreciation and taxes? The investment used is the answer to Question 3.