You are considering a property that will cost $54,200
today. NOI from the property is expected to...
You are considering a property that will cost $54,200
today. NOI from the property is expected to be $20,608
each year for the next five years. Also, at the end of
the fifth year, you expect you can sell the property for
$13,200. What is the property’s IRR?
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A property is expected to have NOI of $100,000 the first year.
The NOI is expected to increase by 3 percent per year thereafter.
Assume that the appraiser would estimate the value in year 10 by
using a 10 percent capitalization rate. The appraised value of the
property is currently $1 million and the lender is willing to make
a 90 percent LTV loan with a contract interest rate of 9 percent,
and it will be amortized with fixed monthly...
You are considering the purchase of a small office building. The
NOI is expected to be the following:
Year 1 = $200,000
Year 2 = $210,000
Year 3 = $220,000
Year 4 = $230,000
Year 5 = $240,000
-The property will be sold at the end of year 5.
-You believe that the property will have a terminal cap rate of
7%.
-You plan to pay all cash for the property.
-You want to earn a 10% return on investment...
An industrial property recently sold for $5,500,000. First-year
NOI is $440,000. NOI is expected to increase annually by 4% over
the next decade. The expected holding period is 7 years.
1. What would terminal cap rate be appropriate?
2. what is the relationship between today's cap rate and the going
out cap rate?
3. In addition to capitalizing income, there is a second method to
estimate terminal value describe the method and provide a numerical
example.
Investing in a $1,000,000 property today yields cash flows from
NOI of $10,000 each year for the next 5 years and an expected sales
price of $1,250,000 at the end of the holding period.
What is the IRR for this investment?
Partition the IRR and find the percent NOI and the resale price
contribute to the overall property value.
A property that can be purchased for $1.7 million has an
expected first year NOI of $190,000. An investor is considering two
loan alternatives:
LOAN A:
A 70% loan-to-value ratio, with interest at 7.5% per annum. The
loan will require level monthly payments to amortize the principle
over 20 years.
LOAN B:
An 80% loan-to-value ratio, with interest at 8% per annum. This
loan will require level monthly payments to amortize the principal
over 25 years.
Fore each loan, determine:...
Consider a Property with expected future NOI of $25,000 per
year for the next 5 years (starting one year from now). After that, the operating cash flow will step
up 20% to $30,000 for the following 5 years. Assume no capital- and leasing expenses.(a) If you expect to sell the property 10 years from now at a
going-out cap rate of 10%, what is the value of the property if the required return is 12%?(b) Now suppose the seller of...
You are considering a project that will require an initial
outlay of $54,200. This project has an expected life of 5 years and
will generate after-tax flows to the company as a whole of $20,608
at the end of each year over its 5-year life. In addition to the
$20, 608 cash flow from operations during the fifth and final year,
there will be an additional cash outflow of $23,608 at the end of
the fifth and final year associated...
You are considering buying a beach house as an investment
property. The price today for the
beach house is $240,000. You can fully depreciate the house on a
straight-line basis over a
thirty year period (and deduct this depreciation expense from your
income taxes). The rent
you will charge on an annual basis will be $10,000. You will face
maintenance costs of
$2,000 every year (also tax deductible). You intend to sell the
property in ten years, and you
expect...
A property has an expected first-year NOI of $1 million. Recent
sales of similar properties indicate that a first-year (or
going-in) cap rate of 12% is reasonable for valuation purposes. A
lender requires a minimum DSCR of 1.25x and will loan up to 75% of
appraised value on a first mortgage. Say the mortgage interest rate
is 6.75%, payments are monthly, and the amortization period is 20
years. (10 points) Hint: solve for the debt
service.
a)
What is the...
A property has first year NOI of $1.5 million. NOI grows at 7%
during the next two years. In year four, NOI goes drops 50% due to
a lost tenant. You are very lucky and replace the tenant. Year five
NOI is 4X year four. (continues below…)
What is year 5 NOI?
continue…You have a $10 million mortgage on this property, at 5%
interest, amortization of twenty years. There are two partners who
have invested $3 million total in the...