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How much principal is paid on the property loan each year? Where does the money come from to pay the balance of the building loan
How much principal is paid on the property loan each year?
Where does the money come from to pay the balance of the building loan back at sale time if the profit is only $642,940 after taxes are paid?
case study: The property is located at the intersection of too heavily traveled major arteries. It is a new, grass walled, five story office building containing 50,000 total square feet- 40,000 of which is rentable space. The other 10,000 ft. include the entry lobby, hallways, elevator shafts, bathrooms, storage space, and utility rooms. A paved parking areas around the building. The rents vary from floor to floor but average $10 per square foot of rentable area per year. operating expenses are 35% of the gross rents, including vacancies and reserves. The total cost of the project is 2.5 million, and then investors can secure a first mortgage for 1.75000,0 70% of the value payable at 10% interest only for 15 years. This requires a 750,000 345 with cash investments. depreciation is established at the annual Street rate of 2.564% 39 years straight line, which is applied to a book basic beginnings at 2 million. The land is booked at 500,000. All leases are established for five years, at which time, the property will be sold. The following tabulation shows a profit analysis of this project including its sale. All rent and operation expenses are kept consistent for the first five years analysis:
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