PLEASE SHOW THE MATH!! of the CURRENT AND FUTURE PROPERTY VALUE MATH ON PAPER OR IN EXCEL NEED THE MATH
Your property management company (insert name here) has been retained by Baxter Realty for third party property management services. Baxter Realty has just purchased The Bella Brava, a community consisting of 3 buildings with 395 apartment homes in total surrounding a central courtyard centrally located in Arlington, VA. The apartment community and some neighboring area details are below: - 3101br,1 ba apartment homes currently rented for $1,410/mo. - 402br,2ba apartment homes currently rented for $1,520/mo. - 45 3br, 2 ba apartment homes currently rented for $1,630/mo. - 0\% vacancy - Although there is very limited parking in the area, residents are not charged for parking - Currently, the residents can reserve the clubhouse free of charge - There are 190 storage lockers on the ground floor which are currently complimentary to residents on a first-come first-serve basis - Cats and dogs weighing less than 50lbs. are welcome but are subject to a $140 non-refundable fee upon lease execution. Currently, there are 119 nonrefundable fees collected for this year. No other pet fees are charged. - Average monthly operating expenses are: legal, $1,760, maintenance & repairs, $21,100, marketing, $5,700, payroll $22,140, landscaping, $3,800, pest control, $1,850, trash removal, $1,475, supplies, $965, telephone and internet, $2,820, electricity, $15,800 water & sewer, $7,800, heating fuel, $14,990 - Current management fee is 4% of EG - In addition, real estate taxes of $529,000 are divided and paid twice a year, in April and October, and property insurance premiums totaling $157,000 are paid once a year in February. - The current capital expenditure budget is $335,000, but you think this can be lowered to $295,000 in the coming year due to your economies of scale using the same vendors for various managed properties around the area - The monthly debt service for this year and the upcoming year is $18,988 - The prevailing cap rate for this type of property in the area is 6.0% Part of your responsibility will be the financial reporting to Baxter Realty. With that being said, the owner would like to see the current year cash flow as well as the property's cash flow budget plan for the upcoming year. Your suggested changes for the upcoming year should be shown in property's cash flow budget plan for the upcoming year. Baxter Realty also wants to know from your property management company how to increase the value of the asset. Additionally, Baxter Realty would like you to evaluate the financial impact of spending $9,900 in cash to go from traditional light bulbs to LED lightbulbs. The annual cash flow increase is $2,900. Suppose that the building's owner asks for a minimum rate of return of 12%. Should the light bulbs be switched out in The Bella Brava? This is not part of the financial statements, but simply a question the owner has consulted with you on. Please note that the cash-on-cash return equation (annual dollar income / total dollar investment) should be used to determine if the lightbulbs make sense financially
