Referring to the example in Figure 13.2(a), suppose the market rent for a two-bedroom unit is $550 per month and for a three-bedroom unit is $650 per month. If the going cap rate is 10%, rework the pro forma calculations for the apartment project of Figure 13.2. Then determine the lenders interest rate. What is the new breakeven vacancy factor?

Market rent for subject property (unfurnished) 55 two-bedroom A, B, or C units1167 sq ft @ 41.0 cents/sq ft = $478.47/mo or $480 x 55 $ 26,400.00 20 three-bedroom A, B units1555 sq ft @ 37.3 cents/sq ft = $580.00/ mo $580 x 20 11,600.00 Total estimated monthly income $ 38,000.00 Other income: Coin laundry, vending machine 150.00 $ 38,150.00 x 12 = annual total 457,800.00 Less vacancy factor of 5% (based on historical data) -22,890.00 Adjusted gross annual income 434,910.00 Less estimated expenses @ 29.45% --128,080.00 Net income before debt service $ 306,830.00 Capitalized value @ 9.5% = $3,229,789.00 = 306,830.00 (0.095) Requested loan value $2,422,000.00 Loan/value ratio - 75% (high) governed by law Long-term debt service @ 9.75% constant = $236,145.00 Debt service coverage ratio 1.3 Loan per unit - $32293.33 Loan per square foot - $25.42 Market rent for subject property (unfurnished) 55 two-bedroom A, B, or C units1167 sq ft @ 41.0 cents/sq ft = $478.47/mo or $480 x 55 $ 26,400.00 20 three-bedroom A, B units1555 sq ft @ 37.3 cents/sq ft = $580.00/ mo $580 x 20 11,600.00 Total estimated monthly income $ 38,000.00 Other income: Coin laundry, vending machine 150.00 $ 38,150.00 x 12 = annual total 457,800.00 Less vacancy factor of 5% (based on historical data) -22,890.00 Adjusted gross annual income 434,910.00 Less estimated expenses @ 29.45% --128,080.00 Net income before debt service $ 306,830.00 Capitalized value @ 9.5% = $3,229,789.00 = 306,830.00 (0.095) Requested loan value $2,422,000.00 Loan/value ratio - 75% (high) governed by law Long-term debt service @ 9.75% constant = $236,145.00 Debt service coverage ratio 1.3 Loan per unit - $32293.33 Loan per square foot - $25.42