Total acquisition price: $3,200,000

• Property consists of eight office suits, three on the first floor and five on the second
• Contract rents: two suits at $4,800 per month, one at $5,600 per month, and five at $2,200 per month
• Annual market rent increase: 3.0% per year
• Vacancy and collection losses: 5% per year
• Operating expenses: 25% of effective gross income each year.
• Capital expenditures: 6% of effective gross income each year.
• Expected holding period: 5 years.
• Expected selling price NOI capitalized at 6.75%.
• Selling expense in year 5:0% of the sale price
• Mortgage financing assumptions:
• First mortgage loan: (75% LTV).
• Annual mortgage interest rate: 6.25%
• Loan term and amortization period: 30 years.
• Total up-font financing costs: 1.75% of loan amount.
• Discount Rate: 10%

Questions You Need to Answer

What is the going in cap rate?

What is the NOI for year five?

What is the selling price after the five year hold?

What is loan balance at sale?

What is the NPV for this project?

What is the IRR for this project?

What is the DCF for this project(note BTCF)?

What is reversion amount?

*Make sure to show your work in the Excel file (provide excel equations as well).