Land value. Extraction method

Your Client wants to buy a piece of land to build a commercial building. It is your job to keep him from overpaying for the land. Use the information below to calculate the price of the dirt . . . Building Info: Market Rents are $25/sqft/yr Gross Lease 20,000 sqft net leasable area Market indicates a vacancy rate of 9% Typical operating expenses are 37% of EGI 2.00 Acre Lot Land Investment Discount Rate = 25% Project timeframe = 1 Year A builder told you it would cost $150/sqft to build the structure. The market indicates an 7.00% cap rate for these types of properties. Answer the following: 1. What is the estimated sale price for the land and building when the construction is complete and the property is leased? 2. In order to make his required rate of return, how much can your client pay for the 2.0 Acre lot? Display your answer in terms of total S and S/ft