Total property acquisition price $4,224,000

Property consists of eight office suites, 3 on the first floor, 5 on the second floor

Contract rents: 2 suites at $7,200 per month, 1 at $14,400 per month, and 5 at $6,240 per month.

It is anticipated that rents will increase annually at the rate of 3% per year

It is anticipated that vacancy and collection loss will be 10% per year

Operating expenses are 40% of effective gross income

Capital expenditures are 5% of effective gross income

Anticipated holding period is 5 years

Expected selling price is based on a cap rate of 8%

It is anticipated that selling expenses will be 4% of the sales price

The first mortgage is $3,168,000

The mortgage interest rate is 5%

The loan term is 30 years

Total upfront financing costs are 3%

5. Calculate Loan to Value and Debt Service Coverage

Use EXCEL to set up a discounted cash flow analysis

Include calculation of Operating Income

Include after Debt Service Cash Flow