LEASE ENTER YOUR ANSWERS AS TOTAL NUMBERS ROUNDED TO THE NEAREST DOLLARI 0.5 or sreater round unless than 0.5 round down). OMITTING ANY PARENTHESES NEGATIVE SIGNS WITHOUT CURRENCY DOLLAR SIGNS, CANVAS WILL CONSIDER FORMATTING WHEN EVALUATING YOUR ANSWERS AND THE THE ONLY CORRECT FORMAT INCLUDES COMMAS AS APPROPRIATE Question 2 You are working at a real estate development firm. You have been staffed on an apartment development project - a 165-unit ground up development project on the north side of Chicago. near Wrigley Field. The building will have a total of 24,750 square feet. Your boss has tasked you with putting together the initial proforma upon construction completion and after lease-up. You conduct market research and conclude that studios will rent for $1,850 per unit. 1 bedrooms will rent for $2,225 per unit, and 2 bedrooms will rent for $2.775 per unit. The proposed development project will have 42 studios, 68 one bedrooms, and 55 two bedroom units. Given there is a modest over supply in the area, you decide to estimate vacancy to be one month per year for 50% of the units. After doing your due diligence, you've learned that a reasonable assumption for real estate taxes are $250/unit/month. You decide to estimate operating expenses on a per square foot basis. You look at 5 nearby, competitive properties, and you find the average of their operating expenses (excluding real estate taxes) to be $58 per square foot. Your development firm is putting up a lot of equity but is able to secure a construction loan for $10 million, at a 4% annual interest rate and a 30 year amortization schedule. This results in annual debt service payments of $572,898. 1. Using the information in the narrative, please calculate the Gross Potential Income (GPI) of: 2. Calculate the vacancy loss described in the assumption narrative in dollars: 3. Calculate Effective Gross Income(EGI): 4. Please calculate TOTAL real estate/property taxes using the information in the narrative: 5. Please calculate the TOTAL operating expenses using the information in the narrative: LEASE ENTER YOUR ANSWERS AS TOTAL NUMBERS ROUNDED TO THE NEAREST DOLLARI 0.5 or sreater round unless than 0.5 round down). OMITTING ANY PARENTHESES NEGATIVE SIGNS WITHOUT CURRENCY DOLLAR SIGNS, CANVAS WILL CONSIDER FORMATTING WHEN EVALUATING YOUR ANSWERS AND THE THE ONLY CORRECT FORMAT INCLUDES COMMAS AS APPROPRIATE Question 2 You are working at a real estate development firm. You have been staffed on an apartment development project - a 165-unit ground up development project on the north side of Chicago. near Wrigley Field. The building will have a total of 24,750 square feet. Your boss has tasked you with putting together the initial proforma upon construction completion and after lease-up. You conduct market research and conclude that studios will rent for $1,850 per unit. 1 bedrooms will rent for $2,225 per unit, and 2 bedrooms will rent for $2.775 per unit. The proposed development project will have 42 studios, 68 one bedrooms, and 55 two bedroom units. Given there is a modest over supply in the area, you decide to estimate vacancy to be one month per year for 50% of the units. After doing your due diligence, you've learned that a reasonable assumption for real estate taxes are $250/unit/month. You decide to estimate operating expenses on a per square foot basis. You look at 5 nearby, competitive properties, and you find the average of their operating expenses (excluding real estate taxes) to be $58 per square foot. Your development firm is putting up a lot of equity but is able to secure a construction loan for $10 million, at a 4% annual interest rate and a 30 year amortization schedule. This results in annual debt service payments of $572,898. 1. Using the information in the narrative, please calculate the Gross Potential Income (GPI) of: 2. Calculate the vacancy loss described in the assumption narrative in dollars: 3. Calculate Effective Gross Income(EGI): 4. Please calculate TOTAL real estate/property taxes using the information in the narrative: 5. Please calculate the TOTAL operating expenses using the information in the narrative: D Question 1 2.5 pts Proforma Template Gross Potential Income (GP) less Vacancy allowance Equals Effective Gross Income (EGI) Less R/E taxes Less Operating Expenses Equals Net Operating Income (NOI) Less Annual Mortgage Payments (ADS) Equals Cash Available for Distribution Narrative with Assumptions Question 1 You are contemplating purchasing a 33 unit apartment building located in Madison, near the capital. Your partners have asked you to put together a simple proforma that projects the net operating income for the property in year 1 of ownership Based on market research, you know that studios rent for $1.200/unit, 1 bedrooms rent for $1.550 per unit, and 2 bedrooms rent for $1,900. Again, this is based on similar property types in the area, so you feel comfortable assuming those rents. The unit mix is as follows: 8 studios, 15 one bedrooms, and 10 two-bedroom units. The current apartment vacancy rate in the downtown Madison area is 10%, so you decide to use this as your vacancy allowance in your proforma. After doing your due diligence, you've learned that a reasonable assumption for real estate taxes is $2,100 on a dollar per unit basis. Your due diligence investigation reveals that operating expenses (excluding real estate taxes) are 27% of GPI (Gross Potential Income). Given the existing relationships that your partners have with local lenders, you are confident that you will be able to secure a $5 million dollar loan with a 4% annual interest rate and a 30 year amortization schedule. This results in annual debt service payments of $286,449. LEASE ENTER YOUR ANSWERS AS TOTAL NUMBERS ROUNDED TO THE NEAREST DOLLAR(0,5 or a a 30 year amortization schedule. This results in annual debt service payments of $286,449. LEASE ENTER YOUR ANSWERS AS TOTAL NUMBERS ROUNDED TO THE NEAREST DOLLARI 0.5 or greater round unless than 0.5 round down). OMITTING ANY PARENTHESES. NEGATIVE SIGNS WITHOUT CURRENCY/DOLLAR SIGNS. CANVAS WILL CONSIDER FORMATTING WHEN EVALUATING YOUR ANSWERS AND THE THE ONLY CORRECT FORMAT INCLUDES COMMAS AS APPROPRIATE 1. Using the information in the narrative, please calculate the Gross Potential Income (GPI) of: 2. Calculate the vacancy loss described in the assumption narrative in dollars: 3. Calculate Effective Gross Income(EGI): 4. Please calculate TOTAL real estate/property taxes using the information in the narrative: 5. Please calculate the TOTAL operating expenses using the information in the narrative: 6. What is the resulting net operating income (NOI): 7. Subtract the given annual debt service (aka mortgage payment) to calculate the distributable cashflow: Question 2 2.5 pts