Question: can someone help me to do it with excel ? thank you so much An investor is evaluating a property with the following projected income
can someone help me to do it with excel ? thank you so much
An investor is evaluating a property with the following projected income and expenses:
Income $750,000 (year 1); increasing at 3.5% per year
Vacancy Loss 7.0% of PGI Potential gross income
Collection Loss 1.5% of PGI Potential gross income
Expenses:
Management Fee 2.5% of EGI Effective Gross Income (EGI)
Property Taxes $75,000 (years 1 to 3); $90,000 (years 4 to 6)
Insurance $15,000 (year 1); increasing at 3.0% per year
Utilities $65,000 (year 1); increasing at 4.0% per year
Janitorial $50,000 (year 1); increasing at 3.0% per year
1.Project the propertys cash flow for years 1 through 6.
2.What are the PGIM, EGIM and Going-in Cap Rates at an $8,000,000 purchase price?
3.Assume that the investor can sell the property at the end of year 5 at a 7.0% residual cap rate on year 6 NOI and there are selling costs of 4.5%. What is the propertys residual value?
4.If an investor requires a 7.0% IRR, what is the NPV of the project?
5 Describe the investments position on the Real Estate Risk Curve. Give an example of something that could change at the property to cause the investment to shift.
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