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RE 306 HW2 - Real Estate 306 Real Estate Process Fall 2007...

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Real Estate 306: Real Estate Process, Fall 2007 Assignment 2 Name:____________________________ (Due November 2 @ 2:45pm) Student ID#:_______________________ ____________________________________________________________________________ This assignment is due by 2:45 p.m. on Friday, November 2 nd uploaded to the course website . Please label your files Lastname_Firstname_Name of Your TA. You must show all work or assumptions used to receive full credit on the assignment. _____________________________________________________________________________ 1. Pro forma statement without finance Your company is considering making an investment in an apartment building. You will not use any debt to buy the building (i.e. it will be all equity). The building has 23 two-bed room apartments and 55 three-bed room apartments. You assume that the monthly rent for two-bed room units is $1,700 and the rent for three-bed room apartments is $2,400. The building has 150 parking spaces. The charge for each of them is $275 per month. The projected information about the investment is as follows. Please construct the pro forma statement (round to dollars): Annual inflation of rents and parking charge 3% Vacancy and collection loss as of PGI 5% Parking Vacancy Allowance 5% Purchase Price / Current Assessed Value $14,150,000 Land value as % of the total value 15% Annual growth of assessed value from Year 1 to 5 3% Property tax mill rate 25 Other Operating Expenses (% of EGI) 30% Planned holding period 4 years Terminal cap rate (applied to 5 th year’s NOI) 7.50%
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