What is the first year annual depreciation on the building

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Reference no: EM132949816

You are investing in a six unit residential property that was built in 1955. It is in good condition. You will be paying $750,000 for it and each unit is occupied and rents, at the market, for $1,000 per month. The land is worth $250,000. The local vacancy factor is 5%. The local property tax assessment rate is 1.25%. The total operating expenses for this property (including ALL expenses except debt service) is 35% of the projected gross income. You are borrowing $600,000 at a simple annual interest rate of 6% with $150,000 cash down payment.

Problem a) What is the CAP rate? What assumptions are you making in your cap rate calculation?

Problem b) What is the first year annual depreciation on the building?

Problem c) What is the annual property tax, based upon the purchase price?

Problem d) What is the cash on cash return on this investment?

Reference no: EM132949816

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