The following problem will be used for the remaining questions:

Problem: You are thinking about investing in a small strip retail center. The broker has a $35,000$ SF$,4$ bay center listed for $$3,565,000.$ You think there is good value add and are planning on offering the seller $90\%$ of the asking price or $$3,200,000,$ rounded. This analysis is based on the assumption the seller accepts your offer.

Each bay leases for $$10,500$ per month.

Vacancy in this market is $5\%$; credit loss $1\%.$

Operating expenses are $45\%$ of EGI.

Capital expenditures for the replacement reserve $=4\%$ of EGI. Your personal investment criteria is to include this CapX above the line.

The loan terms are $6\mathrm{.}5\%$ amortized over $20$ years at a $70\%$ LtV$.$ Upfront fees are $5\%$ of the loan amount.

Question $16$

$5$ pts

What is the capitalization rate?

$7\mathrm{.}55\%$

$6\mathrm{.}81\%$

$8\mathrm{.}75\%$

Question $17$

What is the Potential Gross Income?

$$42,000$

$$213,192$

$$504,000$

$$473,760$

Question $18$

What is the NOI?

$$241,618$

$$473,760$

$$454\mathrm{.}780$

$$260,568$

What is the ECl?

$$450,000$

$$485,775$

$$473,760$

$$478,800$

Question $20$

$5$ pts

What is the Operating Expense Ratio?

$49\%$

$45\%$

$63\%$

$52\%$