Property Assumptions: Purchase Price: &nbsp...

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Question

Property Assumptions: Purchase Price: &nbsp...

Property Assumptions:

Purchase Price: $4,000000

Year 1 PGI: $540,000

PGI Growth Rate (Annual): 3%

Annual Vacancy and Collection Loss (VCL): 10%

Year 1 Operating Expenses (OER): 35%

OPEX growth rate after first year 2%

Sales Price:

-Capitalize HP+1 NOI at 9% $3,895,042

Anticipated Holding Period: 3 Years

Maximum LTV: 70%

Interest Rate: 5%

Amortization Rate: 30 Years

Payments Per Year: 12

Investor Hurdle Rate (Unleveraged): 15%

What is the Loan Amount using the LTV Ratio?
What is the Initial Investment (Cash or Equity Investment)?
What is the Loan Balance at the end of 3 years?
What is the Annual Debt Service (ADS)?
What is the Unleveraged IRR and NPV?
What is the DCR for Year 2?
What is the NOI for Year 3?
Does this investment meet the investor’s unleveraged required Rate of Return?
What is the “Going In” over all Capitalization Rate?
What is the Operating Expense Ratio for Year 3?
What is the Cash on Cash (BTCF) for Year 2?
What is the Mortgage Constant?

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Answer 1

Answer #1

Use spreadsheet for the ease in computations. Enter values and formulas in the spreadsheet as shown in the image below.

В С 1 Property information 2 Purchase price 3 Loan-to-value ratio 4000000 0.7 4 Interest rate 0.05 5 Loan term (years) 30 6 P

The obtained result is provided below.

В с D Property information 2 Purchase price 3 Loan-to-value ratio 4 Interest rate 5 Loan term (years) 6 Payments (per year) $

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Answer 2

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