You buy a duplex apartment $(2-$units$)$ for $$400,000$

You rent out each unit for $$1,500/$mo $(12-$month leases$)$

The costs each year to you are:

Real estate taxes $$3,600$

Insurance $$1,000$

Maintenance $$1,500$

Management $$3,500$

TASKS:

Vacancy is $5\%$ of GPR In Yr $1$

Parking Income is $$500$ in Yr $1$

Other Income is $$100$ in Yr $1$

What is Year $1$ "NOI"?

Year $2$ GPR is $3\%$ higher than Yr $1.$

Vacancy is $5\%$ of GPR In Yr $2.$ Parking and Other don't change

Opex is $3\%$ higher in Yr $2$ vs$.$ Yr $1.$

What is Year $2$ "NOI"?

Fill out all revenue and opex for Yrs $3$ to $5.3\%$ increases and no change to parking$/$other$.$

What is NOI in Years $3$ to $5?$

Capital Structure Calcs:

Purchase price is $$400,000($this is Total Deal Costs$)$

Bank loan is $80\%$ of purchase price

What is the amount of equity required?

Debt Service Calcs:

See sheet labelled Main Loan $-1.$ Enter loan amount

Interest rate is $4\%.$ Amortization schedule is based on $25$ yrs$.$

What is the yearly $(12-$monthly pmts$)$ debt service $($P$+$I$)?$

The bank requires you to "reserve" $$500/$unit$/$year for rainy days ahead

Key Metrics Calcs:

IRR and MOIC $($Equity Multiple$)$

Left to Do: Assume the market cap rate of similar assets is $6\mathrm{.}5\%$ in Year $5.$

Divide Year $5$ NOI by $6\mathrm{.}5\%$ to establish estimated value.

Determine the outstanding loan amount, after $60$ months using the Loan Table

Subtract the loan amount from the estimated market value. "Sale Proceeds"

Add purple Year $5$ Net Cash Flow to the "Sale Proceeds"

Calculate Yr $0$ thru Yr $5$ IRR, levered, using the Initial Equity Amount in Yr $0$ as a negative number.

Calculate MOIC $($multiple on invested capital "Equity Multiple"$),$ by adding Y$1$ to Yr $5$ total NCF and divide it by the Initial Equity in Yr $0($change sign from neg to pos$)$