You come across a piece of vacant land. After analyzing the highest and best use, you determine to move forward. Here are

your projections upon completion and stabilization Year $1$:Buildable SF $1,000,000$

Potential Gross Income $($PGI$)$ $ $10,800,000$

Vacancy & Collection $-$ Commercial $4\mathrm{.}00\%$ $ $(432,000)$

Effective Gross Income $($EGI$)$ $ $10,368,000$

Expenses $30\%$ $ $(3,110,400)$

Net Operating Income $($NOI$)$ $ $7,257,600$

You determine cap rates are $5\mathrm{.}00\%$ for similar projects.

$5.$ What is the estimated value of the project upon completion and stabilization?

$6.$ What is your loan amount at $80\%$ Loan to Value $($LTV$)?$

$7.$ Assuming permanent loan financing of $4\mathrm{.}00\%,30$ year amortization and a minimum $1\mathrm{.}20$x DSCR$,$ what is your

maximum loan amount?

Your costs per buildable SF are Hard Costs of $$70$psf$,$ Soft Costs of $$20$psf$,$ and Interest of $$15$psf$.$ Build your construction

budget and determine the following:

$8.$ What is the maximum price you should pay for the Land $($the residual value$),$ assuming you want a $20\%$ return and

have to pay $3\%$ in selling expenses?

$9.$ If you manage to buy the land for $$7,000,000,$ what would your loan amount be if you were limited to $70\%$ Loan to Cost

$($LTC$)?$ Please answer Questions $8$ and $9.$