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Given Scenario: 20 apartments that rent for $1000 per month each 5% Vacancy rate Expenses: Variable expense ratio of 20% of effective rent plus fixed expenses (not including mortgage) of $22,400 Interest: 5% Monthly Debt Service $9900 REQUIRED: 1. Calculate the NOI.

Given Scenario: 20 apartments that rent for $1000 per month each 5% Vacancy rate Expenses: Variable expense ratio of 20% of effective rent plus fixed expenses (not including mortgage) of $22,400 Interest: 5% Monthly Debt Service $9900 REQUIRED: 1. Calculate the NOI.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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### Given Scenario: - **20 apartments** that rent for **$1000 per month each** - **5% Vacancy rate** - **Expenses**: Variable expense ratio of 20% of effective rent plus fixed expenses (not including mortgage) of **$22,400** - **Interest**: 5% - **Monthly Debt Service**: **$9900** ### REQUIRED: 1. **Calculate the NOI** (Net Operating Income). 2. **Identify the Sales Price** based on the following capitalization rates: - a. **8%** - b. **10%** - c. **12%** - d. **Which is better for the buyer? The seller?** 3. **Identify the Break-even Point** in: - **Rent** - **Units** 4. If the above complex is purchased for the price in **answer 2A**, and the bank will loan based on a **75% LTV** (Loan-to-Value), **how much must the buyer invest**? 5. **What is the first-year ROI** (Return on Investment) based on Net Cash Flow before depreciation and taxes? The investment used is the answer to **Question 4** above.
Transcribed Image Text:### Given Scenario: - **20 apartments** that rent for **$1000 per month each** - **5% Vacancy rate** - **Expenses**: Variable expense ratio of 20% of effective rent plus fixed expenses (not including mortgage) of **$22,400** - **Interest**: 5% - **Monthly Debt Service**: **$9900** ### REQUIRED: 1. **Calculate the NOI** (Net Operating Income). 2. **Identify the Sales Price** based on the following capitalization rates: - a. **8%** - b. **10%** - c. **12%** - d. **Which is better for the buyer? The seller?** 3. **Identify the Break-even Point** in: - **Rent** - **Units** 4. If the above complex is purchased for the price in **answer 2A**, and the bank will loan based on a **75% LTV** (Loan-to-Value), **how much must the buyer invest**? 5. **What is the first-year ROI** (Return on Investment) based on Net Cash Flow before depreciation and taxes? The investment used is the answer to **Question 4** above.
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