You are considering purchasing a small mixed-use building. As part of your analysis, you want to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You are considering purchasing a small mixed-use building. As part of your analysis, you want to project the NOI for next year (20X1). The seller provides you with the following rent roll and information. Unit type Lease-end date Lease Type Square feet Rent per square foot Percentage rent factor Breakpoint Unit 1 Unit 2 The common areas are 2,000 square feet The anticipated sales for the tenant in Unit 3 are $300,000 for 20X1. . No vacancy and credit losses are expected over the foreseeable future. - Property taxes - Income taxes a) b) Unit 3 Office Office Retail Dec. 31 20x9 Dec.31 20X8 June 30 20X6 Gross Double net Triple net 16,000 8,000 8,000 12 10 8 5% 250,000 . The owner has allowed a local company to put up a sign on the side of the building for $2,000 per year. The owner provides you with an income statement showing the following expenses for last year (20X0). Maintenance expenses are expected to increase by $3,000 starting in 20X1. All other expenses are not expected to change. - Property insurance - Snow removal $70,000 $ 6,000 $ 3,000 $ 2,000 $ 8,000 - Maintenance - Management and Other - Mortgage interest - Depreciation Calculate the projected NOI for next year (20X1). Using the 20X1 projected NOI as an estimate for the stabilized NOI and a cap rate of 8%, what is the value of the building? $12,000 $90,000 $65,000 You are considering purchasing a small mixed-use building. As part of your analysis, you want to project the NOI for next year (20X1). The seller provides you with the following rent roll and information. Unit type Lease-end date Lease Type Square feet Rent per square foot Percentage rent factor Breakpoint Unit 1 Unit 2 The common areas are 2,000 square feet The anticipated sales for the tenant in Unit 3 are $300,000 for 20X1. . No vacancy and credit losses are expected over the foreseeable future. - Property taxes - Income taxes a) b) Unit 3 Office Office Retail Dec. 31 20x9 Dec.31 20X8 June 30 20X6 Gross Double net Triple net 16,000 8,000 8,000 12 10 8 5% 250,000 . The owner has allowed a local company to put up a sign on the side of the building for $2,000 per year. The owner provides you with an income statement showing the following expenses for last year (20X0). Maintenance expenses are expected to increase by $3,000 starting in 20X1. All other expenses are not expected to change. - Property insurance - Snow removal $70,000 $ 6,000 $ 3,000 $ 2,000 $ 8,000 - Maintenance - Management and Other - Mortgage interest - Depreciation Calculate the projected NOI for next year (20X1). Using the 20X1 projected NOI as an estimate for the stabilized NOI and a cap rate of 8%, what is the value of the building? $12,000 $90,000 $65,000
Expert Answer:
Answer rating: 100% (QA)
To calculate the projected Net Operating Income NOI for next year 20X1 we need to consider the renta... View the full answer
Related Book For
Auditing The Art and Science of Assurance Engagements
ISBN: 978-0133405507
13th Canadian edition
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Joanne C. Jones
Posted Date:
Students also viewed these finance questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
List three specific parts of the Case Guide, Objectives and Strategy Section (See below) that you had the most difficulty understanding. Describe your current understanding of these parts. Provide...
-
Miller with corporate and personal taxes ____________. Answer options are displayed below it. After Modigliani and Miller's (MM) original no-tax theory, they went on to develop another theory that...
-
Robert Morris was a licensed insurance agent working for his father's independent insurance agency when he contacted Farmers Insurance Exchange in Alabama about becoming a Farmers agent. According to...
-
Suppose that a producer in China is constrained by the MFA to sell a certain number of shirts, regardless of the type of shirt. For a T-shirt selling for $2.00 under free trade, the MFA quota leads...
-
Explain the idea behind the following heuristics: most-constrained variable most-constraining variable least-constraining variable min-conflicts
-
Daley Welding Corporation sells and services pipe welding equipment in Illinois. The following selected accounts appear in the ledger of Daley Welding Corporation on May 1, 2012, the beginning of the...
-
Bakrah El Hib, aged 61, was driving to work on 2nd August when he was struck by Yunis Khallah's car at the Wallchild roundabout at 8:30 am. As a result of the summer school holidays, the roundabout...
-
Which series has the highest beta. BraveNewCoin Liquid Index for Bitcoin 1D BNC Trading Brave Ne Yellow Green Blue Orange
-
You configure the machine to throw a random pitch type each time, while ensuring no 2 consecutive pitches are of the same type and let it throw 3 consecutive pitches. a) What is the sample space of...
-
An offer to pay for a benefi t that has already been received. a. barren pr omise b. consideration c. forbearance d. gratuitous promis e e. general re lease f. moral c onsideration g. past c...
-
The Greek Connection had sales of $32 million in 2015, and a cost of goods sold of $12.8 million. A simplified balance sheet for the firm appears below: a. Calculate The Greek Connections net working...
-
Taking or demanding money or other property from someone by using force or threats of force or economic harm. a. arson b. bribery c. burglary d. extortion e. felony f. forgery g. misdemeanor h....
-
Breaking into and entering another persons property in the night with the intent of committing a felony or stealing property of value. a. arson b. bribery c. burglary d. extortion e. felony f....
-
An obligation to perform actions that are already required. a. barren pr omise b. consideration c. forbearance d. gratuitous promis e e. general re lease f. moral c onsideration g. past c...
-
What is another term for "The Queen of Mathematics"?
-
Organizations are increasing their use of personality tests to screen job applicants. What are some of the advantages and disadvantages of this approach? What can managers do to avoid some of the...
-
Describe and explain the differences and similarities between a financial statement, compliance, and operational audits.
-
In confirming accounts receivable on December 31, 2014, the auditor found 15 discrepancies between the customer's records and the recorded amounts in the subsidiary ledger. A copy of all...
-
The following misstatements are included in the accounting records of Lathen Manufacturing Company: 1. Joe Block and Frank Demery take turns "punching in" for each other every few days. The absent...
-
Develop the following systems using the fairness pattern: 1. Tax fairness: A tax platform based on an ideal that aims to create a system of taxation that is fair, clear, and equivalent for all...
-
BOs make this pattern stable and extendible. Do you agree?
-
Write down some common case studies to highlight the importance of stable analysis patterns.
Study smarter with the SolutionInn App