Apartment Valuations
Koctya
hw_questions-re.xlsQuestions
| OPERATIONS | End of Year 1 | End of Year 2 | End of Year 3 | End of Year 4 | End of Year 5 |
| Before Tax Cash Flow | |||||
| Less Tax | |||||
| After-tax Cash Flow | |||||
| SALE | End of Year 1 | End of Year 2 | End of Year 3 | End of Year 4 | End of Year 5 |
| Before Tax Cash Flow | |||||
| Less Tax | |||||
| After-tax Cash Flow | |||||
| Before-Tax IRR (BTIRR) | |||||
| After-Tax IRR (ATIRR) | |||||
| Effective Tax Rate | |||||
| (Considering Taxes) Would you buy this property for $11.3 m (Yes/No)? | |||||
| Why? | |||||
| The minimum expected rate of return on Equity should be higher than (what) rate so that leverage/debt financing makes sense? |
Input Values
| "Our Favorite" Oakwood Apartments | Tax Considerations: | ||||
| Purchase Price | $11,300,000.00 | Ordinary income tax rate | 36.00% | ||
| Price of Land | 10% of purchase price | ||||
| Total Units | 95 | Depreciation (in years) | 39 | ||
| Unit Size | 1,100 | Capital gains tax rate | 20.00% | ||
| Building Size (SF) | 104,500 | Depreciation recapture | 25.00% | ||
| Analysis Begin Date | 10/20/08 | ||||
| Holding Period | 5 | ||||
| Equity Discount Rate | 11.00% | ||||
| Terminal Rate | 9.00% | ||||
| Selling Cost | 5.00% | ||||
| Inputs | Apartment Unit | ||||
| Name | Two Bedroom | ||||
| Units | 95 | ||||
| Monthly Rent | $1,200.00 | ||||
| Lease Term (Yrs) | 1 | ||||
| Market Monthly Rent | $1,250.00 | ||||
| Market Rent Increase | 3.00% | ||||
| Laundry Income/unit/year | $120.00 | ||||
| Laundry Income increase | 3.00% | ||||
| Market Vacancy Rate | 5.00% | ||||
| Credit Loss Rate | 1.00% | ||||
| Loan: | |||||
| LTV | 0.70 | ||||
| Interest | 8.00% | ||||
| Term | 20 | years | |||
| Payments per year | 12 | ||||
| % of EGI | $ Amount | $ per Unit | Change % | ||
| Real Estate Taxes | 6.70% | $0 | $0.00 | 0.00% | |
| Office Expenses | 0.00% | $20,000 | $0.00 | 3.00% | |
| Insurance | 0.00% | $0 | $150.00 | 3.00% | |
| Repairs & Maintenance | 0.00% | $0 | $550.00 | 3.00% | |
| Advertising | 0.00% | $8,000 | $0.00 | 3.00% | |
| Management | 12.00% | $0 | $0.00 | 0.00% | |
| Utilities | 0.00% | $45,000 | $0.00 | 3.00% | |
| Miscellaneous Expenses | 0.00% | $15,000 | $0.00 | 3.00% |
