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  1. .mb5
  2.                 Real estate investment assignment
  3.  
  4. Thσ purposσ oµ thi≤ assignmen⌠ i≤ t∩ givσ yo⌡ practicσ witΦ ß ì
  5. realistiπ model«  
  6.  
  7. First¼ experimen⌠ ß littlσ witΦ thσ rea∞ estatσ investmen⌠ ì
  8. spreadsheet¼ REINVEST«  Fo≥ example¼ iµ yo⌡ leavσ al∞ othe≥ ì
  9. parameter≤ thσ samσ anΣ changσ thσ interes⌠ ratσ t∩ 14%
  10.  
  11.      1«  Wha⌠ i≤ thσ breakeveε year?
  12.  
  13.  
  14.      2«  Wha⌠ i≤ thσ estimateΣ capita∞ gaiε iµ yo⌡ sel∞ thσ ì
  15. ááááábuildinτ iε thσ tentΦ year?
  16.  
  17.  
  18.      3«  Iµ thσ alternativσ investmen⌠ interes⌠ ratσ change≤ froφ ì
  19. ááááá╕ t∩ 1▓ percent¼ wha⌠ happen≤ t∩ thσ breakeveε year┐  I≤ i⌠ ì
  20. áááááconsisten⌠ witΦ commoε sence?
  21.  
  22.  
  23. Looδ ove≥ thσ formula≤ useΣ iε thi≤ model¼ anΣ answe≥ ß fe≈ morσ ì
  24. questions, like:
  25.  
  26.      1«  Statσ thσ formulß fo≥ thσ loaε amoun⌠ anΣ explaiε wherσ ì
  27. ááááái⌠ camσ from.
  28.  
  29.  
  30.  
  31.  
  32.  
  33.  
  34. ááááá2.  Statσ thσ formulß fo≥ thσ firs⌠ yea≥ marke⌠ valuσ anΣ ì
  35. áááááexplain where it came from.
  36.  
  37.  
  38.  
  39.  
  40.  
  41. ááááá3.  State the formula for the second year market value.
  42.  
  43.  
  44. ááááá4«  Wh∙ arσ thσ seconΣ througΦ 15tΦ yea≥ formula≤ fo≥ marke⌠ ì
  45. ááááávalue different than the first?
  46.  
  47.  
  48.  
  49.  
  50.  
  51.  
  52.  
  53. Experimen⌠ witΦ erasinτ anΣ rebuildinτ part≤ oµ thσ model«  Fo≥ ì
  54. example¼ tr∙ erasinτ thσ marke⌠ valuσ row¼ theε recreatinτ it«  ì
  55. (Yo⌡ wil∞ havσ t∩ turε ofµ protectioε first).
  56. .pa
  57. è                     File Import Assignment
  58.  
  59.      Thσ purposσ oµ thi≤ assignmen⌠ i≤ t∩ givσ yo⌡ somσ practicσ ì
  60. witΦ sharinτ datß betweeε tw∩ programs«  Yo⌡ wil∞ usσ 12│ anΣ thσ ì
  61. REINVES╘ spreadshee⌠ t∩ makσ somσ estimates¼ theε impor⌠ thσ ì
  62. result≤ int∩ ß Wordsta≥ document«  You≥ fina∞ resul⌠ wil∞ bσ thσ ì
  63. summar∙ repor⌠ showε oε thσ nex⌠ page«  I⌠ wa≤ produceΣ usinτ ì
  64. Wordstar¼ bu⌠ thσ number≤ al∞ camσ froφ 123.
  65.  
  66.      1«  LoaΣ thσ REINVES╘ spreadshee⌠ witΦ 123«  
  67.  
  68. ááááá2«  "Printó thσ parameter≤ anΣ ne⌠ result≤ iε ß disδ file.
  69.  
  70. ááááá3«  Changσ thσ interes⌠ rate¼ theε "printó thσ ne≈ "bottoφ ì
  71. ááááálineó iε ß seconΣ disδ file.
  72.  
  73. ááááá4«  Qui⌠ 123¼ becausσ yo⌡ arσ no≈ read∙ t∩ impor⌠ thσ file≤ ì
  74. áááááint∩ ß Wordsta≥ document.
  75.  
  76. ááááá5«  Usσ Wordsta≥ t∩ creatσ thσ "Rea∞ Estatσ Investmen⌠ ì
  77. áááááSummar∙ Report.ó  Turε iε ß printou⌠ oµ thσ repor⌠ wheε yo⌡ ì
  78. áááááge⌠ i⌠ exactl∙ likσ thσ example.
  79.  
  80. A few reminders:
  81.  
  82. áááááThσ Wordsta≥ commanΣ t∩ impor⌠ ß filσ froφ disδ i≤ ctrl-KR.
  83.  
  84. áááááWheε Wordsta≥ ask≤ fo≥ thσ namσ oµ thσ filσ yo⌡ wan⌠ t∩ ì
  85. áááááread¼ don'⌠ forge⌠ thσ extensioε PRN«  (Wheε yo⌡ "printó ì
  86. áááááfile≤ oε thσ disk¼ 12│ automaticall∙ give≤ theφ thσ ì
  87. áááááextensioε PRN).
  88.  
  89. áááááDon'⌠ bσ confuseΣ b∙ blanδ "pagesó iε thσ PR╬ files¼ jus⌠ ì
  90. ááááádeletσ them.
  91.  
  92.      Notσ tha⌠ Wordsta≥ ha≤ beeε useΣ t∩ rearrangσ thσ "bottoφ ì
  93. ááááálineó figure≤ tha⌠ werσ importeΣ froφ 123.
  94.  
  95.  
  96.  
  97. .pa
  98. è              Real Estate Investment Summary Report
  99.  
  100. WitΦ thσ followinτ paramete≥ values¼ wσ expec⌠ tha⌠ thσ buildinτ ì
  101. wil∞ breaδ eveε earl∙ iε thσ fiftΦ year║   
  102.  
  103.  
  104.     PARAMETERS:
  105.     Interest rate                      11.7%
  106.     Sale commission                     6.0%
  107.     Loan points                         2.5%
  108.     Closing costs                   $500.00
  109.     Appreciation rate                   2.5%
  110.     Rent increase/yr                    2.5%
  111.     General cost inc/yr                 2.5%
  112.     Improvement percent                70.0%
  113.     Depreciation period (yrs)            27
  114.     Sale price                  $725,000.00
  115.     Vacancy rate                        3.0%
  116.     Maintenance rate                    4.0%
  117.     Down payment rate                  30.0%
  118.     Tax bracket                        28.0%
  119.     Alternate interest rate             8.0%
  120.     Property tax rate                   1.2%
  121.  
  122. Thσ ne⌠ incomσ relativσ t∩ aε alternativσ usσ oµ thσ fund≤ fo≥ ì
  123. thσ firs⌠ eigh⌠ year≤ i≤ estimateΣ t∩ bσ a≤ follows:
  124.  
  125.  
  126.     Year                            1             2             3
  127.     Net                         ($33,536.64)  ($12,432.03)   $10,197.25
  128.     Cumulative net              ($33,536.64)  ($45,968.67)  ($35,771.42)
  129.  
  130.         4             5             6             7             8
  131.      $34,425.12    $60,403.71    $88,297.57   $118,284.60   $150,557.02
  132.      ($1,346.30)   $59,057.40   $147,354.97   $265,639.57   $416,196.60
  133.  
  134.  
  135. However¼ iµ wσ caε obtaiε ß loaε a⌠ thσ interes⌠ ratσ oµ 10.7%¼ ì
  136. wσ expec⌠ t∩ breaδ eveε durinτ thσ fourtΦ year«  Thσ eight-yea≥ ì
  137. ne⌠ wil∞ bσ a≤ follows:
  138.  
  139.     Year                            1             2             3
  140.     Net                         ($30,100.16)   ($5,546.63)   $20,799.48
  141.     Cumulative net              ($30,100.16)  ($35,646.79)  ($14,847.31)
  142.  
  143.         4             5             6             7             8
  144.      $49,033.46    $79,330.64   $111,880.72   $146,888.92   $184,577.10
  145.      $34,186.15   $113,516.79   $225,397.51   $372,286.43   $556,863.53
  146.  
  147.  
  148. Sincσ ou≥ appreciatioε ratσ anΣ othe≥ parameter≤ werσ choseε ì
  149. conservatively¼ anΣ eveε a⌠ thσ highe≥ interes⌠ ratσ thσ ì
  150. investmen⌠ i≤ profitable¼ wσ recommenΣ makinτ aε offe≥ oµ ì
  151. $725,000.0░ fo≥ thσ building.
  152.  
  153.