A 30-unit apartment building should last 35 years, when it will need to be either replaced...

 

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A 30-unit apartment building should last 35 years, when it will need to be either replaced or undergo major renovation. Assume the building's value at 35 years will be 10% of its construction cost. Assume it will be sold and that the land's cost will be recovered in full. $3.2M Land $4.8M Building $850,000 Annual operating and maintenance 6% Annual property taxes and insurance (% of initial investment) 12% Vacancy rate (a) If the owner wants a 15% rate of return, what is the required monthly leasing cost for each unit? (b) If turning 2 units into an exercise facility would decrease the vacancy rate by 5%, would that be a good decision? A 30-unit apartment building should last 35 years, when it will need to be either replaced or undergo major renovation. Assume the building's value at 35 years will be 10% of its construction cost. Assume it will be sold and that the land's cost will be recovered in full. $3.2M Land $4.8M Building $850,000 Annual operating and maintenance 6% Annual property taxes and insurance (% of initial investment) 12% Vacancy rate (a) If the owner wants a 15% rate of return, what is the required monthly leasing cost for each unit? (b) If turning 2 units into an exercise facility would decrease the vacancy rate by 5%, would that be a good decision?

Answer rating: 100% (QA)

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