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
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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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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