Business, 15.04.2020 23:56 ricardorendon100

You are considering the purchase of an office building for $1.5 million today. Your expectations include the following: first-year potential gross income of $340,000; vacancy and collection losses equal to 15 percent of potential gross income; operating expenses equal to 40 percent of effective gross income and capital expenditures equal 5 percent of EGI. You expect to sell the property five years after it is purchased. You estimate that the market value of the property will increase four percent a year after it is purchased and you expect to incur selling expenses equal to 6 percent of the estimated future selling price. What is the estimated going-in cap rate (Ro) using NOI for the first year of operations

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You are considering the purchase of an office building for $1.5 million today. Your expectations inc...

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