Please give Step by Step AnswerOtherwise i give DISLIKE !! Use this information to analyze weather it is better to own or rent the property with the following financing and rent options. Create an Excel Model to analyze the trade-offs. Property infoPurchase price $1,000,000 Buying transaction fees: 15% of purchase price Initial rent: $85000/yr Rental growth rate: 5% Property appreciation rate: 6% Insurance: $4000/yr Maintenance: $4000/yrExpense growth: 3.5% Transaction fees for future sale: 12% of sale price Marginal tax rate: 30% Property tax: 2.0% of current property appraised value LTV: 80% Interest rate: 7% Loan Term: 30 yrLoan type: Annual pay CPM fully amortizing Tax exclusions: First $500,000 of gain on sale

Part 2: Explanation:Step 1: Determine the cash flows for owning the property. a. Calculate the…

Answered: Use this information to analyze weather…

Personal Finance

13th Edition

ISBN:9781337669214

Author:GARMAN

Publisher:GARMAN

Chapter16: Real Estate And High-risk Investments

Section: Chapter Questions

Problem 1FPC

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Written report with the following content: • Appendix1: Leasing Explain the calculations. Your recommendations Objective: Should FFT lease or construct their own production facility Option 1: Construct Costs to incur: Buying land, construct building and getting ready for use (FFT has these funds available in their bank account today so no mortgage is needed) $ 1,200,000 Taxes, insurance, and repairs (per year) $110,000 Intended years of use 15 Projected market value in 15 years $ 1,250,000 Option 2: Lease Intended years of use 15 Deposit required today (this deposit will be returned to FFT when the lease contract is complete is 15 years) $ 100,000 Annual lease payment $ 160,000 Property taxes (annual) to be paid by FFT $ 15,000 Insurance (annual) to be paid by FFT $ 15,000 Required rate of return 8% Methodology: The consulting team is proposing to perform a NPV analysis and determine the benefit to leasing or construction. Based on the analysis, they will recommend the preferred option…
a. You are considering acquiring a building with a Dollar General as tenant and the following financial terms and performance ratios (see graphic). You want to buy it at an 8.5 cap. What is your offer, at the 8.5 cap? Show your work. PROPERTY INFO FINANCIAL SUMMARY Tenant Dollar General Purchase Price $1,519,661* Street Address 511 Old Route 15 Cap Rate 6.80% City Port Trevorton Net Operating Income $103,337 State PA Price / SF $167 Zip 17864 Rent/SF $40 *Offering 2.5% Fee to Buy-Side Broker APN 05-05-003 DOLLAR GENERAL CONTACT INFORMATION GLA 9,100 SF Listing Agent Nina McGaughy Lot Size 1.31 AC Phone Number (424) 325-2624 Year Built 2019 INVESTMENT HIGHLIGHTS Absolute Net (NNN) Investment Dollar General operates on an Absolute Net (NNN) Lease with tenant fully responsible for maintenance, insurance and taxes providing the landlord with a low maintenance asset DOLLAR GENERAL Corporate Guarantee Dollar General Corporation (NYSE:DG) is a fortune 500 company with over 80 years in…
Consider the following investment in a piece of land. Purchase price 500,000 Annual maintenance: 5,000 Expected sale price after 8 years: 1,000,000. Determine a) The rate of return (to 1/100 percent) and b) What is the lowest sale price the investor should accept if she wishes to earn a return of 10% after keeping the land for 10 years? Show complete solution pls. No excel computation
Return on Investment (ROI) Formula: ROI = [(Investment Gain – Cost of Investment) / Cost of Investment] X 100 You buy a parcel of land for $100,000. After spending $200,000 to build a home on said land, you put it on the market. Several months after listing the property, you sell it for $350,000.
finance A property has a potential gross income of $2,000,000. You estimate that vacancy should be 6% and that you will need $50,000 in replacement reserves. If operating expenses are $752,000 what is your OPEX ratio for this asset?
You have been asked to estimate the market value of an income-producing property. The table below provides 5 years of projected cash flows for the property. Use the discounted cash flow approach to income valuation to calculate the market value. Assume that you sell the property at the end of year 5 and that the net proceeds from the sale are $5 million. Also assume that the discount rate is 10%. PGI EGI NOI Year 1 $4.18 million $750,000 $780,000 $811,200 $637,500 $663,000 $689,520 $318,750 $331,500 $344,760 $6.11 million $4.12 million Year 2 $4.40 million Year 3 Year 4 $843,648 $717,101 $358,550 Year 5 $877,394 $745,785 $372,892
Assume a broker has listed a grocery-anchored shopping center with 100,000 sf of total retail space for lease, at a price of $9 million at an advertised 7.0% cap rate in a suburban market approximately 30 miles northwest of Pittsburgh. a. Calculate the price in dollars per square feet (show your work). b. Calculate the net operating income (NOI) (show your work)? C. If you purchase this asset and hold it for five years, what is a reasonable exit cap rate you could obtain for the sale, assuming no major investment in the property while you own it, only routine maintenance (no roof replacement or mechanical upgrades)?
purchase property that has an annual net income of 587000 and want to ear 8.25% on investment what do I pay for property
Optimum Properties Corp. is considering the construction of a 50-unit condominium near the University Belt area. The 15-year investment study shows the following data: Disbursements Revenue Land P8000 000.00 Land, after 15 yrs P43 000 000.00 Building 25 000 000.00 Bldg, after 15 yrs 8600 000.00 300 000.00 Maintenance/yr Insurance & Tax/yr Rent/unit-yr 120 000.00 1.2% With an estimated occupancy rate of 92% at all times, validate the acceptability of the project using the IRR method. The company applies a 15% MARR on its investments (Ans. Project is acceptable, 15.7%)
Here is what we know: We are looking at purchasing a Townhome in Gvegas Purchase price $190,000 Yearly taxes $1,400/yr, but if it's in the city limits, then add another $800/yr Yearly Home Owners Insurance $ 1,200/yr HOA (Home Owners Association) $900/yr Projected repair costs $900/yr Vacancy Rate 1 months rent Things to consider.... What if the AC unit goes out? • Vacancy Rates (What is that?) • Vetting Renters (What does that mean?) Tax benefits (Are there any?) Depreciation (How so) ⚫ Appreciation (How does it work)
The direct capitalization method can be used to quickly value a building. You are evaluating a property that produces gross rent of $524,000 per year with an expected NOI of $247,000 per year. Similar properties have traded with a cap rate of 4.5% and and a GIM of 8.5. What is the value of the subject property based on the direct capitalization method?
A Real Estate Investment Company (REIC) has a weighted average cost of capital at 10% and $2 million of total capital to invest. The REIC aims to earn rental income from the investment and do not intend to sell the property in the short term. Which of the following property is the most appropriate one to invest? Select one: a. Property A: 8% Cap Rate, NOI $400,000 b. Property A: 11% Cap Rate, NOI $180,000 c. Property A: 10% Cap Rate, NOI $100,000 d. Property A: 12% Cap Rate, NOI $300,000 None of the above e

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