Problem II: Simplified Financial Analysis $(50$ points$)$

You want to develop a flex, office$-$warehouse building with $22,000$ square feet $($SF$)$ of rentable space and have gathered the following information from your preliminary market analysis.

$$ Local rent will be around $$14/$SF$/$year with a steady$-$state vacancy rate of $5\%$

$$ Operating expenses: $$5/$year per SF of rentable space

$$ Mortgage loan at $10\%$ annual interest rate amortized over $20$ years, $120\%$ DSCR$,$ and $75\%$ LTV

$$ Total construction costs: $$1,350,000$

$1.$ How much will you be able to spend on land acquisition? $(20$ points$)$

$2.$ If construction costs and site acquisition costs increase to $$1,950,000,$ what will be the minimum rent per SF required for the project? $(20$ points$)$

$3.$ Recalculate the required rent$/$SF in question $2$ if the vacancy rate is now $12\%.$ Explain your answer. $(10$ points$)$