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13 Cards in this Set
- Front
- Back
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If you are given ATCF, and annual return of 10%, how much equity should you be willing to invest in property today?
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Just take the NPV of the ATCFs
a. only invest if asking price is less than NPV |
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If given the mort. value, term, and interest rate, how do you calculate the monthly pmt?
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Financial Calculator:
PV= Mort. value FV=0 I/Y= Int. Rate/12 N = Number of Y times 12 |
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how do you appraise a home, if you are using comparisons?
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1. divide price/ sq. ft = price per sq. ft.
2. find the value of addition features by dividing the price of a home with the same sq. footage w/ a feature/ by the common sq. foot amt. 3. then just multiple the sq. footage of the home to be appraised by its value per sq. ft. |
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How many acres does a square subdivision lot that contains the lot is 150' by 150'?
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1. multiply the dimensions by each other 150 * 150 = 22500
2. 22500/ 43560 = .51653 |
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What is the homestead exemption? How do you qualify?
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1. It is 5500, must be owner occupied.
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What is the assessment value?
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The assessment value is what you use to divide the property value by (after subtracting the homestead exemption), then you multiply this by the tax rate to get the property taxes...
FMV. 75000 - 5500= 69500/3= 23166.67 * .07= 1622 |
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If given the FMV 800,000, the tax rate 8%, 40% assessment ratio, and the sale price 1,200,000, how much would you expect the annual taxes to increase by...
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800,000 * .40 = 320,000 * .08 = $25,600
1,200,000* .40 = 480,000* .08 = 38,400........just take the difference = 12,800 |
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If given the
1. # of Apartment Units: 300 2. Annual Rent: $6,000 per apartment 3. Vacancy Rate: 5% 4. Operating Expense Ratio: 45% 5. Debt Coverage Ratio: 1.4 6. Mortgage loan Rate: 6.75% 7. Number of Years for Mortgage: 10 years 8, Minimum Cash-on-Cast-return: 20% 9. $6,500,000.00 Use Alternative DCF method |
1. Gross Income
2. - Less Vacancy 3. = Effective Gross Income 4. - Operating Expenses 5. = Net Operating Income 6. / Debt Coverage ratio 7. Mortgage PMT / Mortgage Constant [ i(1+ i)^n/(1+i)^n - 1] 8. = Mortgage Value 9. Then you take NOI 10. - Mortgage payment 11. = Cash flow before Taxes 12. / by the Required Cash on Cash Return 13. Equity Value= $1,343,570 14. + Mortgage Value 15. = Property Value 16. Take asking Price 17. - Mortgage Value 18. Required Equity 19. Take cash Flow before Taxes/ Req. equity = 20. Get Actual COC Return |
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What Are the steps to the DCF Approach?
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1. Write out years
2. for initial y=0 put - cash outlay 3. Calculate potential gross income (units * rents or sq * income per sq ft) 4. -subtract vacancy % 5. = Effective gross Income 6. - subtract operating expenses 7. = net operating income 8. - debt service [can do NOI/ debt coverage ratio] 9. = Before Tax Cash Flow 10. - subtract out depreciation [bld. value/ 39 if commercial non res. , bld. value/ 27.5 if residential] 11. + add back principal payments 12.= Get Taxable income 13. subtract out [ or add if -, taxes] 14. = get After Tax Cash Flow 15. now calculate After Tax CF on Sale = Sale Price of Property - [purchase price - cum. depreciation]= gain 16. Gain* Capital Gains Tax 17. = Get Cap gain Tax value 18. To Get ATER, Take [Terminal Sale price - (Loan value- sum of principal pmts.) - Capital gains tax value 19. Get ATER, Add to final year of ATCF 20. Discount all cash flow and get NPV, only invest in = NPV w/ satisfactory IRR |
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How do you calculate, cash on cash rate of return?
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[cash on cash rate of return] = (Before Tax Cash Flow/ Equity Invested)
note: before tax cashflow is just NOI - Annual Mortgage value] |
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how do you find debt coverage ratio?
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debt coverage ratio = NOI/ Debt Service, usually will have to divide NOI by the debt coverage ratio to get debt service
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After Tax CF on Sale =
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After Tax CF on Sale = Sale Price of Property - [purchase price - cum. depreciation]= gain
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To Get ATER, ....
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To Get ATER, Take [Terminal Sale price - (Loan value- sum of principal pmts.) - Capital gains tax value
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