| John Williams wants to purchase an apartment
complex. The complex consists of 75 units each renting for $700 per month. The
estimated vacancy and collection loss rate is 7 percent. The insurance for the
building is $40000 annually and taxes are $22000 annually. Utilities are $18000
and the maintenance expense is $29000. Assume a market cap rate of 11 percent. Recent sales of nearby apartment complexes have resulted in the following information. {{U}}Characteristics{{/U}} {{U}}Units{{/U}} {{U}}Slope Coefficient in $per Unit{{/U}} Proximity to downtown In miles -350000 Vacancy rate Percentage - 50000 Building size Units + 75000 Williams' proposed apartment complex is 4 miles away from downtown and has an estimated vacancy rate of 6 percent. |