You are considering purchasing a small office building for $1,975,000

Your expectations include:

First-year gross potential income of $340,000

Vacancy & collection losses equal to 15% of PGI

Operating expenses = 40% of EGI

Capital expenditures = 5% of EGI

$1,481,250 mortgage amortized over 25 years with monthly payment of $10,469.17

Total up-front financing costs = 2% of the loan amount

COMPUTE (SHOW FORMULA AND YOUR WORK)

• NOI
• Annual Debt Service
• Before Tax Cash Flow
• Overall (Going-In) Cap Rate
• Cash-on-Cash Return (Equity dividend rate)
• Debt coverage ratio
• Loan to value ratio (LTV)