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

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

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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