\nThe following examples illustrate how to use the real estate formulas. <\/p>\n
Example No 2.
\nPotential Gross Income:\t$244,800
\nVacancy & Bad Debt Allowance:\t5.0%
\nOperating Expenses\t$49,300
\nMortgage \t$1,685,000
\nMortgage Payment (P+i) \t$147,500
\nNumber of Suites \t24
\nTotal Rentable Area \t18,720 Square feet
\nNote: All figures are annual
\n\tCalculate the Market Value using the following financial measures
\nEffective Gross Income Multiplier (EGIM): 9.30
\nNet Income Multiplier (NIM): 12.50
\nCapitalization Rate (Cap Rate): 8.00%
\nReturn on Equity (ROE): 5.57%<\/p>\n
\nQuestion 3:
\nConsider a property with expected future net cash flows of $25,000 per year for the next five years (starting one year from now). After that, the operating cash flow should step up 20 percent, to $30,000, for the following five years. If you expect to sell the property 10 years from now for a price 10 times the net cashflow at that time, what is the value of the property if the required return is 12%.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
The following examples illustrate how to use the real estate formulas. Example No 2. Potential Gross Income: $244,800 Vacancy & Bad Debt Allowance: 5.0% Operating Expenses $49,300 Mortgage $1,685,000 Mortgage Payment (P+i) $147,500 Number of Suites 24 Total Rentable Area Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-4931","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/4931","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=4931"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/4931\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=4931"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=4931"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=4931"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}