(Primarily Ch. 5) Given Scenario: 20 apartments that rent for $1000 per month each 5% Vacancy rate...
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Question:
(Primarily Ch. 5)
Given Scenario:
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
1. Identify the Sales price for the propertybased on the following capitalization rates:
A. 8%
B. 10%,
C. 12%
D. Which is better for the buyer?The seller?
2. Identify the break-even point in rent?Units?
3. 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?
4. What is the first year ROI based on Net Cash Flow before depreciation and taxes.The investment used is the answer to Question 3 above.
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