You are a real estate investor that has an interest in purchasing a multifamily property in Atlanta, Georgia. You received the offering brochure and you discovered that this is a 100 unit apartment complex near the Grove Park. In using your analytical skills, including your ability to analyze this market, perform a Before Tax/ No Financing Analysis on this apartment complex. The market information is as follows: 26. Rents are $900 per month and will increase at a rate of 3% per year.

27. Vacancy rates are 5%

28. There is laundry income in year 1 in the amount of $1,600 and will continue to increase at a rate of 2% per year.

29. Operating expenses are estimated to be approximately 44% of collected income.

30. Sales price should be calculated using Year 6 NOI capped at 5%

31. Cost of sale is 5%

32. What is year three potential rental income?

33. What is year four other income?

34. What is year six net operating income?

35. What is the projected sales price?

36. What is the cost of sale?

37. What is the sale proceeds before tax?

38. What is the Internal Rate of Return for this deal?

39. Calculate what an investor who has a 10 percent yield requirement could pay for the property and still achieve the target yield? You now look at the possibility of financing a portion of the purchase price using debt with the following assumptions: 75% Loan-to-Value (LTV) Interest rate 5.5% Term: 20 years You are still planning on selling the property at the end of year 5.

40. What is the loan amount based upon your answer to question 8?

41. What is the monthly and annual payment? What is the before tax cash flow at the end of year 3? What is the Levered IRR for this project? Based upon your required return of 10%, would you make this investment and why?