How much would the cost be for the subject property (per SF basis) in order to...

How much would the cost be for the subject property (per SF basis) in order to produce a feasibility annual rent of $43.00/SF

Site 5.36 acres

Land value $12.00

Net rentable area of building 89%

Building size 100,000SF

Cap rate 9.25%

Vacancy rate 5%

Management 5.5% of EGI

Real estate taxes 1.2% of value

Variable expenses are $200,000

Fixed expenses $500,000

Replacement reserves $200,000

Solutions

Expert Solution

Note: Conversion of acres to sq ft was done from google
Since land value per unit was not mentioned, I have assumed it to be on per sqft basis

Effective Gross Income = Gross Rent - Vacancy Rate

Value of Property = Net Operating Income / Cap Rate
= 2,702,067.90 / 9.25%
= $29,211,544.86

Cost of Property = Value of Property - Replacement Reserves
= 29,211,544.86 - 200,000
Cost of Property = $29,011,544.86

jeff jeffy answered 1 year ago

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