Question
You are considering the purchase of an industrial building for $11,350,000 today. Your expectations for this stabilized property include the following: first-year potential gross income
You are considering the purchase of an industrial building for $11,350,000 today.
Your expectations for this stabilized property include the following: first-year potential gross income of $3,450,000; vacancy and collection losses equal to 5% of potential gross income; operating expenses equal to 35% of effective gross income; and capital expenditures equal to 7% of EGI. You have arranged a mortgage loan with 80% LTV and an annual interest rate of 3.5%. The loan will be amortized over 15 years.
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Calculate the following for comparison to other similar properties: (a) Capitalization rate? (b) Effective gross income multiplier? (c) Operating expense ratio?
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Financial Data Analytics Theory And Application
Authors: Sinem Derindere Köseo?lu
1st Edition
303083798X,3030837998
