Appraisal Problem
Estimate the present market value of a 10 unit apartment house given the following information pertaining to the property. Each apartment has 1,000 square feet of living area, 3 bedrooms and kitchen appliances. Tenants pay their own utilities. The value of the land is $250,000. The estimate replacement value is $195 per square foot for this type of construction.
Total operating expenses, insurance, and property taxes for the year, $12,000
Management fees are 6% of total rents. The building is 20 years old and has an estimated future useful life of 40 more years. First mortgage are available at 6% for 75% of the purchase price. Equity will be used as the other 25% of the purchase price and requires a 10% return.
Compute the Following
Net income before capitalization__________
Capitalization rate adjusted for recapture_________
Estimated value of the property using the income approach $____________
Estimated value of the property using the replacement cost approach $_____________