Problem 4: Evaluating a Multifamily Investment
You are considering purchasing a Class B multifamily project in a midsized town in Central Texas and
have received the following information about the project: (Annual Figures unless otherwise noted):
Asking Price:
Number of Units
Average Rent per unit:
$9,000,000
185
$660 per month
Current Vacancy
Proforma Vacancy
Misc Income:
Property Taxes
Repairs and Maintenance
2%
7%
2,130 (estimated for full occupancy)
149,325
106,529
Management, Common Area Utilities, Other Expenses
300,254
CAPEX
$250 per unit
The property is approved for a 75% LTV loan with 2 points at 4.75% interest rate, with a 5 year term on a
25 year amortization schedule (balloon payment due at the end of year 5.)