You have been asked to estimate the market value of an apartment complex that is producing$1,115,000 in annual net operating income. Four highly similar and competitive apartmentproperties within two blocks of the subject property have sold within that past three months. Allfour offer essentially the same amenities and services as the subject. All were open-markettransactions with similar terms of sale. In short, all are equally valid substitutes for the subjectproperty. The sale prices and estimated fırst year net operating incomes for the four properties wereas follows:Comparable 1: Sales price $22,000,000; NOI $1,100,000Comparable 2: Sales price $25,100,402; NOI $1,250,000Comparable 3: Sales price $21,089,109; NOI $1,065,000Comparable 4: Sales price $22,000,000; NOI $1,089,000What is the indicated value of the subject property using direct capitalization, rounded to thenearest dollar?

Direct Capitalization Method: This method computes the value by dividing the net operating income…

Answered: What is the indicated value of the…

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What is the indicated value of the subject property using direct capitalization, rounded to the nearest dollar?

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter5: Probability: An Introduction To Modeling Uncertainty

Section: Chapter Questions

Problem 9P: Cooper Realty is a small real estate company located in Albany, New York, that specializes primarily...

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ABC Residential Investors, LLP, is considering the purchase of a 120-unit apartment complex in Steel City, Pennsylvania. A market study of the area reveals that an average rental of $640 per month per unit could be realized in the appropriate market area. During the last six months, two very comparable apartment complexes have been sold in the same market area. The Oaks, a 140-unit project, sold for $9 million. Its rental schedule indicates that the average rent per unit is $630 per month. Palms, a 90-unit complex, is presently renting units at $730 per month, and its selling price was $6.6 million. The mix of number of bedrooms and sizes of units for both complexes is very similar to that of the subject property, and both appear to have normal vacancy rates of about 10 percent annually. All rents are net as tenants pay all utilities and expenses. Required: a. Based on the data provided here, how would an appraiser establish an estimate of value? (Round intermediate calculations and…
ABC Residential Investors, LLP, is considering the purchase of a 120-unit apartment complex in Steel City, Pennsylvania. A market study of the area reveals that an average rental of $640 per month per unit could be realized in the appropriate market area. During the last six months, two very comparable apartment complexes have been sold in the same market area. The Oaks, a 140-unit project, sold for $9 million. Its rental schedule indicates that the average rent per unit is $630 per month. Palms, a 90-unit complex, is presently renting units at $730 per month, and its selling price was $6.6 million. The mix of number of bedrooms and sizes of units for both complexes is very similar to that of the subject property, and both appear to have normal vacancy rates of about 10 percent annually. All rents are net as tenants pay all utilities and expenses. Required: a. Based on the data provided here, how would an appraiser establish an estimate of value of the oaks and palms property? (Round…
ABC Residential Investors, LLP, is considering the purchase of a 120 unit apartment complex in steel city, Pennsylvania. A market study of the area reveals that an average rental of $600 per month unit could be realized in the appropriate market area. During the last six months, two very comparable apartment complexes sold in the same market area. The oaks, 140 unit project, sold for $9 million. its rental schedule indicates that the average rent per unit is $550 per month. Palms, a 90 unit complex, Is presently renting units at $650 per month, and its selling price with $6.6 million the mix of number of bedrooms and sizes of units for both complexes is very similar to the subject property in both appear to have normal vacancy rates about 10% annually. All rents are net so tenants pay all utilities and expenses. a. Based on the data provided here, how would an appraiser establish an estimate of value? b. What other information would be desirable in reaching a conclusion about the…
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