Question 4a: How much will GSB offer to lend? (2 points)

(Answers are rounded to the closest thousand dollars)

A.$1,151

B.$1,199

C.$956

D.$1,079

Question 4b: How much equity must GNOSH raise to do the project? (3 points)

(Answers are rounded to the closest thousand dollars)

A.$991

B.$207

C.$721

D.$786

BEMORE APARTMENTS Project Overview: A redevelopment organization in the Glendale neighborhood - Glendale Neighbors Opposed to Substandard Housing (GNOSH) - is contemplating the rehabilitation of a 24-unit apartment building as its next project. The building, the Bemore Apartments, was constructed in 1890 and is eligible for listing on the National Register of Historic Places. The building has been vacant for 10 years and consists of 24 one-bedroom apartments. The appraiser has determined that one-half of the acquisition cost is attributable to the land value. An appraiser has informed GNOSH that the market rents for the project's units should be $725 per month. GNOSH anticipates operating expenses to run $3,500 per unit, per year. The vacancy rate will be 10 percent (10%) in the first year and five percent (5%) annually thereafter. Construction and Permanent Uses: GNOSH has put together a project budget totaling $2,070,000: T Acquisition (1/2 land cost) Construction Architectural & Engineering Permits and Fees Permanent Loan Fees Construction Interest Developer Fee Capitalized Operating Reserve DEVELOPMENT COSTS Paid During Paid at Close of Construction Permanent Financing $400,000 1,240,000 90,000 20,000 10,000 $ 10,000 40,000 200,000 60,000 Total $ 400,000 1,240,000 90,000 20,000 20,000 40,000 200,000 60,000 TOTAL $270,000 $1,800,000 151 $2,070,000 QUESTION 3 GSB has also indicated that its loan cannot exceed 75 percent (LTV = 75%) of the project's as-complete fair market value (FMV). The appraiser has identified a market capitalization rate of 8% (0.08). BEMORE APARTMENTS Project Overview: A redevelopment organization in the Glendale neighborhood - Glendale Neighbors Opposed to Substandard Housing (GNOSH) - is contemplating the rehabilitation of a 24-unit apartment building as its next project. The building, the Bemore Apartments, was constructed in 1890 and is eligible for listing on the National Register of Historic Places. The building has been vacant for 10 years and consists of 24 one-bedroom apartments. The appraiser has determined that one-half of the acquisition cost is attributable to the land value. An appraiser has informed GNOSH that the market rents for the project's units should be $725 per month. GNOSH anticipates operating expenses to run $3,500 per unit, per year. The vacancy rate will be 10 percent (10%) in the first year and five percent (5%) annually thereafter. Construction and Permanent Uses: GNOSH has put together a project budget totaling $2,070,000: T Acquisition (1/2 land cost) Construction Architectural & Engineering Permits and Fees Permanent Loan Fees Construction Interest Developer Fee Capitalized Operating Reserve DEVELOPMENT COSTS Paid During Paid at Close of Construction Permanent Financing $400,000 1,240,000 90,000 20,000 10,000 $ 10,000 40,000 200,000 60,000 Total $ 400,000 1,240,000 90,000 20,000 20,000 40,000 200,000 60,000 TOTAL $270,000 $1,800,000 151 $2,070,000 QUESTION 3 GSB has also indicated that its loan cannot exceed 75 percent (LTV = 75%) of the project's as-complete fair market value (FMV). The appraiser has identified a market capitalization rate of 8% (0.08)