Potential Gross Income 100,000 sq. ft for the coming year |
||
average rent $15.00 per ft. |
$ 1,500,000 |
|
Less Vacancy Allowance (average 8%) |
$ (120,000) |
|
Effective Gross Income |
$ 1,380,000 |
|
Cleaning expenses (5% of net rev) |
$ (69,000) |
|
Insurance ($ 0.02 per dollar replacement, R.C. = $40 per ft. |
$ (80,000) |
|
Management & Maintenance (11% of revenue) |
$ (151,800) |
|
Reserve for Replacement (savings for major repairs) |
$ (50,000) |
|
Property Taxes ($0.10 per $100 of R.C.) |
$ (4,000) |
|
$ (354,800) |
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Estimated Net Operating Income |
$ 1,025,200 |
|
We are planning to own this property for 5 years. Rents are projected to grow at 2% per year, vacancy is expected to remain constant at 8% for the first 3 years then jump to 10% in year 4 and remain at that level into the future, insurance will increase 2% per year and the rest of the expenses are as described. What is the NOI in year 5? |
The NOI (Net operating income) for Year 5 is $1,086,883 calculated as below:
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