Residential Apartment Building 138 units Apartment. Breakdown Monthly Rent (36) Studios (48) 1 Bedrooms (42) 2 Bedrooms (12) 3 Bedrooms $ 750.00 1,500.00 2,200.00 2.700.00 Closing Costs: 2.5% of Purchase Price Vacancy: 3% of Gross Potential Rent Loan Constant 6.5% (Based on a 30 year amortization) Ordinary Income Tax Rate: 28% Capital Improvements: $ 213,000 Real Estate Taxes 187,000 Insurance 73,000 Annual Debt Service 1,337,213 Payroll and Payroll Taxes 185.000 Union Benefits 37.500 Utilities 78,000 Repairs 150,000 Supplies Legal and Accounting 30,000 25,000 15. 16. Assume the new owner believes that they could increase the Gross Potential Rent Income in the first year by 2%, at the original capitalization rate, how much increase in value would the owner realize? Using the information obtained in question #15, what would the new cash-on- cash return be? Beginning in year 2, based upon question #15, assuming rents increase 5% per year; expenses increase 3% per year; vacancy remains 3% of Gross Potential Rent, what would the property sell for at a capitalization rate of 6% at the end of 17. year 4? 18. 19. Using the information obtained in question #15 above, how much debt (at the end of year 1) could be obtained on the property assuming a debt coverage ratio of 1.3 and a loan constant of 7.5%? Using the information obtained in question #17 above, if the owners decided to sell the property at the end of year 4, how much gain or loss would they realize versus their original purchase price? Using the information obtained in question #17 above, what is the net income for years 2, 3 and 42 20. Residential Apartment Building 138 units Apartment. Breakdown Monthly Rent (36) Studios (48) 1 Bedrooms (42) 2 Bedrooms (12) 3 Bedrooms $ 750.00 1,500.00 2,200.00 2.700.00 Closing Costs: 2.5% of Purchase Price Vacancy: 3% of Gross Potential Rent Loan Constant 6.5% (Based on a 30 year amortization) Ordinary Income Tax Rate: 28% Capital Improvements: $ 213,000 Real Estate Taxes 187,000 Insurance 73,000 Annual Debt Service 1,337,213 Payroll and Payroll Taxes 185.000 Union Benefits 37.500 Utilities 78,000 Repairs 150,000 Supplies Legal and Accounting 30,000 25,000 15. 16. Assume the new owner believes that they could increase the Gross Potential Rent Income in the first year by 2%, at the original capitalization rate, how much increase in value would the owner realize? Using the information obtained in question #15, what would the new cash-on- cash return be? Beginning in year 2, based upon question #15, assuming rents increase 5% per year; expenses increase 3% per year; vacancy remains 3% of Gross Potential Rent, what would the property sell for at a capitalization rate of 6% at the end of 17. year 4? 18. 19. Using the information obtained in question #15 above, how much debt (at the end of year 1) could be obtained on the property assuming a debt coverage ratio of 1.3 and a loan constant of 7.5%? Using the information obtained in question #17 above, if the owners decided to sell the property at the end of year 4, how much gain or loss would they realize versus their original purchase price? Using the information obtained in question #17 above, what is the net income for years 2, 3 and 42 20
