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You are considering purchasing a small warehouse for $1,250,000 Your expectations include: First-year gross potential income of $300,000; Vacancy & collection losses equal to 10%

You are considering purchasing a small warehouse for $1,250,000

Your expectations include:

  • First-year gross potential income of $300,000;
  • Vacancy & collection losses equal to 10% of PGI;
  • Operating expenses = 45% of EGI;
  • Capital expenditures =3% of EGI (assume "above-line"treatment)
  • 70%LTV mortgage @ 7.5%
  • Mortgage will be amortized over 30years with monthly payments
  • Total up-front financing costs = 2% of the loan amount

Based on the information above,calculate the following ratios:

A.Going-in cap rate

B.EDR

C.EGIM

D.OER

E.DCR

F.DYR

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