The Standard has $200$ units and in$-$place rents of $$2,000$ per month per unit. Due to substandard

management, the asset is currently $90\%$ occupied. The current annual operating expenses are $$1,900,000$

per year. Immediately in Year $1,$ we expect to operate at $95\%$ occupancy during our $5-$year investment hold

and increase rents by $3\mathrm{.}0\%,$ targeting a $60\%$ NOI margin in Year $1($i$.$e$.$ the expenses will be different$).$

Assume rents continue to increase at $3\mathrm{.}0\%$ while expenses increase by $2\mathrm{.}0\%$

We expect to pay a $5\mathrm{.}0\%$ cap rate on current financials $($assume purchase price is total capitalization,

meaning there are no closing costs or capitalized budgets$).$ Lenders will provide a loan at acquisition that

is: $(1)$ no more than $65\%$ loan$-$to$-$value $($LTV$)$; $(2)$ has no less than a $9\mathrm{.}0\%$ debt yield; and $(3)$ has at least a

$1\mathrm{.}35$x debt service coverage ratio $($DSCR$).$ Assume the debt costs $5\mathrm{.}5\%$ per year, is interest$-$only $($i$.$e$.$ does

not amortize$),$ and has a $10-$year term.

Assuming we sell the property in Year $5$ at a $4\mathrm{.}75\%$ cap rate $($assume no closing costs$),$ please complete the

Excel such that the following questions are answered $($and please replicate answers below$)$:

$1.$ What is the expected purchase price?

$2.$ How much debt can we place on the property? What constrained the loan proceeds?

$3.$ In Year $3$ what are:

a$.$ Debt Yield

b$.$ DSCR

c$.$ Unlevered Yield

d$.$ Equity $($levered$)$ Yield

$4.$ What should we expect the sale value to be$?$

$5.$ What is the IRR?

$6.$ What is the investment multiple?

$7.$ Bonus: please replicate the six answers below if we instead bought the property all cash and

added debt in Year $2$ using the same loan constraints. Why are IRR and multiple so different?