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Consider the following pro forma for the next 4 questions Potential Gross Income 100,000 sq. ft...

Consider the following pro forma for the next 4 questions

Potential Gross Income 100,000 sq. ft for the coming year

average rent $15.00 per ft.

$   1,500,000

Less Vacancy Allowance (average 8%)

$     (120,000)

Effective Gross Income

$   1,380,000

Cleaning expenses (5% of net rev)

$      (69,000)

Insurance ($ 0.02 per dollar replacement, R.C. = $40 per ft.

$      (80,000)

Management & Maintenance (11% of revenue)

$    (151,800)

Reserve for Replacement (savings for major repairs)

$      (50,000)

Property Taxes ($0.10 per $100 of R.C.)

$          (4,000)

$    (354,800)

Estimated Net Operating Income

$   1,025,200

We are planning to own this property for 5 years. Rents are projected to grow at 2% per year, vacancy is expected to remain constant at 8% for the first 3 years then jump to 10% in year 4 and remain at that level into the future, insurance will increase 2% per year and the rest of the expenses are as described. What is the NOI in year 5?

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