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 25 unit apartment complex near the Vine City MARTA station. 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: 1. Rents are $800 per month and will increase at a rate of 3% per year. 2. Vacancy rates are 6% 3. There is laundry income in year 1 in the amount of $1,400 and will continue to increase at a rate of 2% per year. 4. Operating expenses are estimated to be approximately 40% of collected income. 5. Sales price should be calculated using Year 6 NOI capped at 8% 6. Cost of sale is 5% Using the worksheet on the next sheet conduct a Before Tax/No Financing Analysis and answer the following questions: Cash Flow Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Potential Rental come Vacancy & Credit Losses Effectie Rental income Other Income Gross Operating home Operating Expenses Net Operating home 1. What is year three potential rental income? 2. What is year four other income? 3. What is year six net operating income? 4. What is the projected sales price? 5. What is the cost of sale? 6. What is the sale proceeds before tax? 7. What is the Internal Rate of Return for this deal? 8. Calculate what an investor who has a 10 percent yield requirement could pay for the property and still achieve the target yield? 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 25 unit apartment complex near the Vine City MARTA station. 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: 1. Rents are $800 per month and will increase at a rate of 3% per year. 2. Vacancy rates are 6% 3. There is laundry income in year 1 in the amount of $1,400 and will continue to increase at a rate of 2% per year. 4. Operating expenses are estimated to be approximately 40% of collected income. 5. Sales price should be calculated using Year 6 NOI capped at 8% 6. Cost of sale is 5% Using the worksheet on the next sheet conduct a Before Tax/No Financing Analysis and answer the following questions: Cash Flow Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Potential Rental come Vacancy & Credit Losses Effectie Rental income Other Income Gross Operating home Operating Expenses Net Operating home 1. What is year three potential rental income? 2. What is year four other income? 3. What is year six net operating income? 4. What is the projected sales price? 5. What is the cost of sale? 6. What is the sale proceeds before tax? 7. What is the Internal Rate of Return for this deal? 8. Calculate what an investor who has a 10 percent yield requirement could pay for the property and still achieve the target yield
