On January 1, 2016 you closed escrow on a ten unit apartment building in North Hollywood, CA .  It was built in 1952.  You  paid $1,062,000.00. The tax bill for $13,275 reflects the assessor's determination that the land was valued at 25% of the cost and the improvements at 75% of the purchase price (Use these  percentages/ratios to calculate first year depreciation).

 

Your gross scheduled income is  based on 7, 1 bedroom units that rent for $750 per month and 3, 2 bedroom units that rent for  $1,000 per month.

The laundry room produces $588 in annual income.

The vacancy/ uncollectible factor is 3%.

Your annual operating expenses for taxes, insurance, gardener, utilities paid by landlord, repairs, trash collection , management, licenses, pest control are 39.67% of gross scheduled income.

Your new trust deed ( first loan) is for $620,000  and  has a  loan payment is $3919 a month.  Your down payment is $442,000.

The interest on the first year of the loan is approximately $43,100.

Your tax bracket is 37.4%.

Your tax adviser has informed you all passive losses are usable in the current year.

USING ALL OF THIS THE answer for the question is the first-year depreciation for the apartment building is $19,309.09.

Extra Information: 

1) Gross Scheduled Income:

• 7 one-bedroom units rented at $750/month: $750 * 7 = $5,250/month
• 3 two-bedroom units rented at $1,000/month: $1,000 * 3 = $3,000/month

Gross Scheduled Income per year = ($5,250 * 12) + ($3,000 * 12) = $75,000 + $36,000 = $111,000

 

2) Annual income from the laundry room: $588

 

3) Vacancy/Uncollectible Factor: 3% of the Gross Scheduled Income 

Vacancy/Uncollectible Amount = 0.03 * $111,000 

= $3,330

 

4) Annual Operating Expenses: 39.67% of Gross Scheduled Income Operating Expenses 

= 0.3967 * $111,000

= $43,953.70

 

5) Loan Information:

• Loan amount: $620,000
• Loan payment per month: $3,919

6) Interest on the first year of the loan: Approximately $43,100 ( that is the interest that will be needed to be paid.)

7) Tax Bracket: 37.4% ( it is according to the level of the income.)

8) All passive losses are usable in the current year.

 

But I need help filling out these questions now. 

First Year Cash Flow Analysis

1.   Gross Scheduled Income                                 $

2.   Plus: Other Income                                          +     

                                                                                 ___________

3.   Equals: Total Gross Income                           $

4.   Less: Vacancy Factor/Credit Loss                  -

                                                                                 ___________

5.   Equal: Gross Operating Income                    $

6.   Less: Annual Operating Expenses                -

                                                                                 ___________

7.   Equals: Net Operating Income                     $

8.   Less: Annual Debt Service                             -

                                                                                 __________

9.   Equals: Before Cash Tax Flow                     $

 

Tax Benefit Analysis

 

10.  Net Operating Income                                    $

11.  Less: Interest (Loan 1)                                    -

12.  Less: Interest (Loan 2)                                    -

13.  Less: Cost Recovery (Depreciation)              -

                                                                                 ___________

14.  Equals: Real Estate Taxable Income OR     $

15.  Equals: Estimated Allowable Loss (if loss)   -

16.  Times: Tax Bracket (times line 14 or 15)   

                                                                                 ___________

17.  Equals Taxes Saved or Paid                           $

 

Net Spendable Income

 

18.  Before Tax Cash Flow (line 9)                        $

19.  Plus/Less: Taxes Saved or Paid (line 17)

                                                                                   ___________

20.  Equals: Net Spendable Income                       S

                 (After - Tax Cash Flow                   

As the Investor's Advisor, you are asked to answer the following Questions:

NOTE: PLEASE SHOW YOUR CALCULATIONS

 

1.    What is the Before Tax Cash Flow?               $

2.    What are the taxes saved/paid?                      $

3.    What is the Net Spendable Income?               $

4.    What is the Gross Rent Multiplier?                ___________

5.    What is the Capitalization Rate?                     __________%

6.    What is the before tax cash on cash rate?       __________%

7.    What is the after tax cash on cash rate?          __________%

8.    If the prevailing cap rate in the market is

       8%, what is the maximum that should be

       Paid for this 10 unit apartment?                     $__________