Question 6 (10 points) CASE STUDY TWO: Income Approach (10 marks) You are appraising a better than average apartment building containing twelve 2- bedroom suites. Your analysis reveals that comparable suites in the area rent at $930 per month, which includes one parking stall. Typical vacancy and collection loss rates for similar apartments in the area is currently 3%. An analysis of similar apartment buildings indicates that typical operating expenses for the subject are 33% of the effective gross income. You have found the following recent sales of improved apartment properties, which are comparable to the subject but in average condition (all 2-bedroom suites): Sale No. 1 A 10 suite apartment building, which sold for $765,000. This comparable had an effective gross income of $110,000, and operating expenses of 34%. Sale No. 1 A 10 suite apartment building, which sold for $765,000. This comparable had an effective gross income of $110,000, and operating expenses of 34%. Sale No. 2 A 12 suite apartment building, which sold for $925,000. This comparable had an effective gross income of $132,000, and operating expenses of 33% Sale No. 3 A 14 suite apartment building, which sold for $1,125,000. This comparable had an effective gross income of $155,000 and operating expenses of 32%. Based on the above information, answer the following. Marks Marks 1. Calculate the effective gross income and net operating income for the subject property. (2 Marks) 2. Calculate the gross income multiplier and overall capitalization rates indicated by Sales 1, 2, and 3. (5 Marks) 3. Estimate the market value of the subject property using the information in (a) and (b), using the GIM and OCR. Clearly explain the rationale for your reconciliation