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lina2011 [118]
3 years ago
7

The potential gross income of a warehouse is $4,200 a month and the vacancy rate is 2 1/2%. The taxes are $3750, the monthly mai

ntenance costs are $350, monthly reserves for replacement are $250, depreciation is $575 a month, management fees are $500 per month, debt service is $1200 per month and the quarterly landscaping fees are $600. If the cap rate is 12.5% what is the estimated value of the warehouse?
Business
1 answer:
Marrrta [24]3 years ago
5 0

Answer:

$238,320

Explanation:

First we should determine the total yearly revenue:

$4,200 (monthly income) x 12 = $50,400 - 2.5% (vacancy rate) = $49,140

Now we must determine the expenses:

monthly maintenance costs = $350 x 12 = $4,200 per year

taxes = $3,750 per year

monthly reserves for replacement = $250 x 12 = $3,000 per year

management fees = $500 x 12 = $6,000 per year

quarterly landscaping fees = $600 x 4 = $2,400 per year

Total revenues                                                       $49,140

maintenance costs                                                ($4,200)

taxes                                                                       ($3,750)  

reserves for replacement                                     ($3,000)

management fees                                                 ($6,000)

<u>landscaping fees                                                   ($2,400)   </u>

net profit per year                                                 $29,790

warehouse value = $29,790 / cap rate = $29,790 / 12.5% = $238,320

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