Question
You have just completed the appraisal of an office building and have concluded that the market value of the property is $2,500,000. You expect potential
You have just completed the appraisal of an office building and have concluded that
the market value of the property is $2,500,000. You expect potential gross income
(PGI) in the first year of operations to be $450,000; vacancy and collection losses
to be 9 percent of PGI; operating expenses to be 38 percent of effective gross
income (EGI); and capital expenditures to be 4 percent of EGI.
a. What is the EGI for the first year?
b. What is the NOI for the first year?
c. What is the implied going-in capitalization rate?
d. What is the effective gross income multiplier (EGIM)?
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