Consider the following potential investment. A 40-unit apartment building, built in 1980, is listed for sale at a 6.5% cap rate. Assume there are 30 two-bedroom units and 10 three-bedroom units. The two-bedroom units rent for $1,000 per month with one-year leases. The three-bedroom units rent for $1,200 per month. The property has a current vacancy rate of 5% for the three-bedroom units and 5% for the two-bedroom units. Operating expenses are 50% of effective gross income. Determine the following and show your work for the full investment (all 40 units). a. Gross Potential Rent for the year (assumes 100% occupancy). b. Vacancy Loss Amount in $'s for the year. C. Effective Gross Income for the year (equals Gross Potential Rent - Vacancy) d. Net Operating Income (equals Effective Gross Income - Operating Expenses) e. Calculate the listing price

An investor is considering buying an apartment complex for $2,000,000 that has a projected year one NOI of $140,000 and the NOI is expected to increase three percent annually. The investor intends to hold the property five years, sell it for a price calculated by capitalizing the sixth year NOI at seven percent (round the sale price to the nearest $1,000), and incur a cost of sale of four percent of the projected sale price. The tax assessor shows the improvements to be 80 percent of the total value. The investor's marginal tax rate is 37 percent, capital gains rate is 20 percent, and cost recovery recapture rate is 25 percent. What is the "Without Financing/After Tax” Internal Rate of Return (rounded to nearest whole percent? O 7 percent 8 percent 9 percent 10 percent

An owner of the ATRIUM Tower Office Building is currently negotiating a five-year lease with ACME Consolidated Corporation for 20,000 rentable square feet of office space. ACME would like a base rent of $11 per square foot (PSF) with step-ups of $1 per year beginning one year from now. Required: a. What is the present value of cash flows to ATRIUM under the above lease terms? (Assume a 10% discount rate.) b. The owner of ATRIUM believes that base rent of $11 PSF in (a) is too low and wants to raise that amount to $15 with the same $1 step-ups. However, now ATRIUM would provide ACME a $53,000 moving allowance and $130,000 in tenant improvements (Tls). What would be the present value of this alternative to ATRIUM? c. ACME informs ATRIUM that it is willing to consider a $14 PSF with the $1 annual stepups. However, under this proposal, ACME would require ATRIUM to buyout the one year remaining on its existing lease in another building. That lease is $6 PSF for 20,000 SF per year. If ATRIUM…

You are considering purchasing a lot adjacentto your laundry business to provide adequate parking space for your customers. You need to borrow$75,000 to secure the lot. You have made a deal with alocal bank to pay the loan back over a five-year periodwith the following payment terms: 14%, 20%, 26%,32%, and 38% of the initial loan at the end of first,second, third, fourth, and fifth years, respectively.(a) What rate of interest is the bank earning fromthis loan?(b) What would be the total interest paid over thefive-year period?