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
