Carrie Mathison is considering purchasing a home for ($150),000 and flipping it in three years. The expected
Question:
Carrie Mathison is considering purchasing a home for \($150\),000 and flipping it in three years. The expected rent is \($1\),200/month and expenses are \($200\)/month. Ms. Mathison anticipates a rental increase of 2.0% per year, an expense increase of 2.0% per year, and a terminal cap rate in year 3 of 9.0%. Ms. Mathison expects to borrow 80% from a traditional lender using a conventional 30-year fixed rate mortgage at 4.0%, amortized annually. If she anticipates a discount rate of 10% and a reinvestment rate of 2%, determine the following: (must develop an annual pro forma showing ALL work). Note: IRR and NPV should be calculated using the HP-12C and not by hand. MIRR is by hand.
Step by Step Answer:
Foundations Of Real Estate Financial Modelling
ISBN: 9781138046184
2nd Edition
Authors: Roger Staiger