1. You are analyzing a mixed use building that has 80,000 square feet of office, 10,000 square feet of retail and 96 apartments. The office space rents for $30 per square foot, the retail for $40 per square foot and the average apartment rent is $1,000 per month. If office expenses are $8.50 per square foot, retail has an unrecoverable expense ratio of 15 percent and apartments have a 30 percent unrecoverable expense ratio. What is the PGI, EGI and NOI. Assume the vacancy and credit loss is 5 percent for all property classes.


If the "cap" rate is 8 percent what is the value of the property?

2. You are developing a 50,000 square foot office warehouse that cost $75 per square foot. The land has a value of $600,000 including site improvements. If you require a return of 12 percent how much is your NOI? At what rent (PGI) is it financially feasible to develop this property assuming expenses are 15 percent and vacancy & credit loss is 4 percent?

3. A lender requires a DCR of 1.18. If the NOI is $120,000. What is the maximum debt service?

4.Valerie purchased a home for $200,000 and sold five years later for $275,000. She financed the purchase with an 80 percent loan to value (LTV); in other words he put down 20 percent of the purchase price. The annual interest rate on the loan was 4.5 percent with no discount points for 30 years with monthly payments. What is Kurt's total return and what is the annual return?

5. You have owned and occupied you home for the last three years and now want to sell it. You purchased it for $180,000 and now anticipate selling it for $375,000 less closing costs of eight percent. You have capital improvements amounting to $50,000. Assume this is a long term capital gain at a rate of 15 percent, what is your tax liability?

6. As a real estate agent/broker, you are considering listing a property for sale. The property owner (your client) informed you that a 20 foot strip of land has been acquired for the widening of the road in front of the property and a concrete median will be construction which will restrict the ingress/egress. He does not want you to disclose this information to any potential customers. What should you do and why?

7. You have found your dream home! The purchase price is $210,000 and you have saved enough to cover your closing costs as well as a 20 percent down payment. The Virginia Credit Union is willing to lend you 80 percent of the purchase price with an interest rate of 4.75 percent amortized over a 30 year period with monthly payments, provided that your totaling housing cost does not exceed 28 percent of your income and your total debt does not exceed 36 percent of your income. Real estate taxes are 1 percent of the purchase price, insurance is $900 per year and homeowners' association dues are $200 per month. Your annual earned income is $48,000 and you have income from other sources (investments, stocks, bonds, CDs, etc.) of $2,500 per year. Your other debt (student loans, car payment, credit cards, etc.) obligate you to pay $800 per month. Do you qualify to purchase the house? Prove your answer (show your work).

8.A borrower has a low credit score, thus a higher risk borrower. Dewey Cheatham and Howe Financial Services is willing to lead $150,000 to purchase a property. The annual interest rate on the loan is 9 percent with 4 discount points and has a prepayment penalty of 5 percent. The loan is amortized over 20 years. What is the effective interest rate if the loan is paid off after seven years? Show all work.

9. You purchased a property five years ago for $2,400,000 with an 80% loan at 9% amortized for 30 years with monthly payments. You have sold the property and have net proceeds of $2,700,000. What is your return (annualized percentage) on investment? Hint: Show all work including PMT, FV, etc. Assume that the annual rent more than offsets the mortgage payment and other holding costs.

10. You are looking to develop a 90,000 class A office building. The site is eight acres and the land cost $10.00 per square foot of land area. Site improvements cost $125,000 per acre and the building costs including tenant improvements is $150 per square foot of building area. If market rents are $26 per square foot, operating expenses are $9.50 per square foot, market vacancy is 5 percent and you require a return of 8.0 percent is it financially feasible to construct this building? What is feasibility rent?

11. Jessica's mortgage requires her to pay $1,545 per month for the next 240 months. The balance on her loan is $180,000. What is the annual interest rate on Jessica's loan?

12. An office building is determined to have a cost of $15,000,000 for depreciation. What is the depreciation amount for the first year if the building was purchased on January 1st?

13. Assume a net operating income of $14,000, depreciation of $4,000, debt service of $13,000 (interest is $12,000 of this amount), vacancy and credit loss of $7,000, interest expense of $12,000, operating expenses of $3,000, and a tax rate of 28%. Assuming that the investor can use any tax shelter benefits, what are the taxes due or the taxes saved ($$$) for these annual figures?

14. Suppose an investor is considering a non-residential rental property that has an asking price of $400,000. The land is valued at $175,000. The property has four rental units that are expected to rent for $1,200 each per month for the next five years (PGI each year of $57,600). Vacancy and bad debt allowance is expected to be 5% of potential gross income. Operating expenses are expected to be 16% of effective gross income. A mortgage loan is available for 80% of the purchase price at 8% annual interest with annual payments over 25 years. The investor faces a 28% tax rate and expects to buy this property on January 1, keep it for 5 years (through December 31 five years later, then sell it for $400,000 (less 5% selling expenses). What is the expected BTCF for each year of the investment holding period?

- Using the information in the question above, what is the amount of the first year's depreciation deduction?

15. An apartment building with a depreciable value of $10,000,000 is purchased on January 1st. What is the depreciation amount for the first year?

16. Assume a gross selling price of $1,000,000, net selling price of $950,000, accumulated depreciation of $200,000, loan payoff of $350,000, purchase price of $350,000, depreciated value of $150,000, capital gain tax rate of 20%, and a tax rate on capital gains due to depreciation of 25%. What is the AFTER?

17. Assume a gross selling price of $1,000,000, net selling price of $950,000, accumulated depreciation of $200,000, loan payoff of $350,000, purchase price of $350,000, depreciated value of $150,000, capital gain tax rate of 20%, and a tax rate on capital gains due to depreciation of 25%. What are the taxes due on the sale?

18. Assume a net operating income of $14,000, depreciation of $4,000, debt service of $13,000 (interest is $12,000 of this amount), vacancy and credit loss of $7,000, interest expense of $12,000, operating expenses of $3,000, and a tax rate of 28%. Assuming that the investor can use any tax shelter benefits, what is the cash flow after taxes?