Problem #1

An income producing property has a gross rental income of $225,000, vacancy and collection losses of 2.5% of gross income, and annual expenses of $55,000.

1. What is the Net Operating Income (NOI)?
2. If the Capitalization Rate is 9.5%, what is the estimated value of the property based on the income approach?

Problem #2

A seller would like to net $100,000 from the sale of their property. Assuming all sales expenses would equal 9% of the sales price, what sales price would result in $100,000 proceeds to the seller?