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CNRPA TEST ANSWERS

A.) 9% MINIMUM RETURN TO SATISFY BOTH THE LENDER AND THE BUY
B.) $2,108,800.00 WHAT YOU PAID FOR THE BUILDING
$105,440.00 COST PER UNIT
$98.54 COST PER SF
C.) $262,616.92 NOI AT THE END OF YEAR 10
D.) $4,376,948.71 HOW MUCH YOU SOLD THE BUILDING FOR
$218,847.44 COST PER UNIT
$204.53 COST PER SF
11.38 GRM
E.) 21.94% IRR AT SALE
F.) $2,546,675.50 WHAT YOU COULD PAY FOR THE BUILDING IF 15% IRR WAS REQ
LENDER AND THE BUYER

G IF 15% IRR WAS REQUIRED


BAND OF INVESTMENT ANALYSIS
Position Interest Percentage x Rate of Return = Requirement

Equity "Buyer" 0.25 x 0.14 = 0.03


Lender 0.75 x 0.08 = 0.06

Total 0.09

Answer: 9% to satisfy both the lender and the buyer.


Property Address
Description/Property Type 20 Unit Apartment Building
City Culver City
Rating/Quality (Bldg and Location) B/B
Age 1978
Number of Units 20
Square Feet 21400
Average Sq. Ft. Per Unit 1070
Bedrooms 40
Bathrooms 40
Unit Mix/Rent Roll Number of Units
One Bedrooms 0
Two Bedrooms 20
Laundry 20

Price $2,373,333.33
Down $830,666.67
Loan $1,542,666.67
Gross Rent Multiplier 9.57
Cost Per Unit(CPU) $118,666.67
Cost Per Sqare Foot $110.90
CAP RATE 7.50%
Gross Scheduled Income(GSI) $248,000.00
Vacancy $0.00
Gross Operating Income(GOI) $248,000.00
Expenses ($70,000.00)
Net Operating Income(NOI) $178,000.00
Debt Service ($117,008.43)
Cash Flow $60,991.57

Cash on Cash 7.34%


ROI 7.34%
Aggregate IRR
IRR(Divided by the time investment held)

Year 10 Year Income


1 $248,000.00
2 $260,400.00
3 $273,420.00
4 $287,091.00
5 $301,445.55
6 $316,517.83
7 $332,343.72
8 $348,960.90
9 $366,408.95
10 $384,729.40
Net Rentable @93% Average Unit Size
19902 995.1
x 93%

Rent Sq. Ft. Rent/Sq.Ft./Month

$1,000.00 995.10 $1.00


$33.33

35%
65%

(PFA TEST)plucked from air

0%

($3,500)

Vacancy GOI Expenses


$0.00 $248,000.00 ($70,000.00)
$0.00 $260,400.00 ($72,100.00)
$0.00 $273,420.00 ($74,263.00)
$0.00 $287,091.00 ($76,490.89)
$0.00 $301,445.55 ($78,785.62)
$0.00 $316,517.83 ($81,149.19)
$0.00 $332,343.72 ($83,583.66)
$0.00 $348,960.90 ($86,091.17)
$0.00 $366,408.95 ($88,673.91)
$0.00 $384,729.40 ($91,334.12)

NPV Calculation: The Formula looks like "=NPV(15%,I57:I67)+I56"


Remember to start your formula with an "=" sign
The equal sign tells Excel that you are going to write a formula
The name next to the equals sign tells Excel what type of formula you
For instance, if you are looking for Net Present Value your formula wo
If you are looking for Internal Rate of Return your formula would be =
After you have named the formula, Excel will ask you for your argume
The arguments begin when you insert an open parenthesis. Each arg
An Argument are the values that Excel will use in the formula to calcu
Excel is very smart and tries to make it as easy for you as possible to
It will give you a little cheat sheet at the bottom of each formula to g
The argument ends with the close of a parenthesis. But you can still
Excel to make it's calcuations. By way of example - when you are cal
of return and the cash flows for each year as your arguments. Then
closing the parenthesis, you will tell Excel to also take into considerat
and to use the down payment as the basis of the return you are rece
Monthly Income Per Unit Annual Income Per Unit
$- $-
$20,000.00 $240,000.00
$666.67 $8,000.00
Total Annual Income $248,000.00

Cash Flow
NOI Loan $(830,666.67)
$178,000.00 ($117,008.43) $60,991.57
$188,300.00 ($117,008.43) $71,291.57
$199,157.00 ($117,008.43) $82,148.57
$210,600.11 ($117,008.43) $93,591.68
$222,659.93 ($117,008.43) $105,651.50
$235,368.64 ($117,008.43) $118,360.21
$248,760.06 ($117,008.43) $131,751.63
$262,869.73 ($117,008.43) $145,861.30
$277,735.04 ($117,008.43) $160,726.61
$293,395.27 ($117,008.43) $3,440,649.75

21.81%

ike "=NPV(15%,I57:I67)+I56"
h an "=" sign
re going to write a formula
lls Excel what type of formula you are writing
et Present Value your formula would be =NPV
f Return your formula would be =IRR
Excel will ask you for your arguments
rt an open parenthesis. Each argument is separated by a comma.
cel will use in the formula to calculate your answer
e it as easy for you as possible to write your formulas.
t the bottom of each formula to give you hints as to what to insert into the cell
a parenthesis. But you can still add additional information to allow
ay of example - when you are calculating the NPV you will provide the target rate
h year as your arguments. Then after you close your argument by
Excel to also take into consideration that you invested funds as a down payment
e basis of the return you are receiving.
Sale Proceeds
$4,889,921.24 Sale @ 6% CAP
$(1,307,813.46) Loan Repayment
$(317,844.88) Sale Cost
$3,264,262.90 Sale Proceeds
Upon Sale:
$244,496.06 Cost Per Unit
$228.50 Cost Per Sqare Foot
12.71 Gross Rent Multiplier

NPV Calculation
$(830,666.67)
$60,991.57
$71,291.57
$82,148.57
$93,591.68
$105,651.50
$118,360.21
$131,751.63
$145,861.30
$160,726.61
$3,440,649.75
15% Insert Target IRR to the Left
$480,876.53 This is how much more or less the
buyer can pay to achieve their
target IRR. This amount will be
added to the original purchase
price to tell you know how much
you should pay for the property to
achieve your target return

$2,854,209.86
Property Address
Description/Property Type 20 Unit Apartment Building
City Culver City
Rating/Quality (Bldg and Location) B/B
Age 1978 Net Rentable @93% Average Unit Size
Number of Units 20 19902 995.1
Square Feet 21400 x 93%
Average Sq. Ft. Per Unit 1070
Bedrooms 40
Bathrooms 40
Unit Mix/Rent Roll Number of Units Rent Sq. Ft. Rent/Sq.Ft./Month Monthly Income Per Unit Annual Income Per Unit
One Bedrooms 0 $- $-
Two Bedrooms 20 $1,000.00 995.10 $1.00 $20,000.00 $240,000.00
Laundry 20 $33.33 $666.67 $8,000.00
Total Annual Income $248,000.00

Price $2,108,800.00
Down $738,080.00 35%
Loan $1,370,720.00 65%
Gross Rent Multiplier 8.50
Cost Per Unit(CPU) $105,440.00
Cost Per Sqare Foot $98.54
CAP RATE 7.50%(PFA TEST)plucked from air
Gross Scheduled Income(GSI) $248,000.00
Vacancy ($19,840.00) 8%
Gross Operating Income(GOI) $228,160.00
Expenses ($70,000.00) ($3,500)
Net Operating Income(NOI) $158,160.00
Debt Service ($103,966.59)
Cash Flow $54,193.41

Cash on Cash 7.34%


ROI 7.34%
Aggregate IRR
IRR(Divided by the time investment held)
Cash Flow
Year 10 Year Income Vacancy GOI Expenses NOI Loan $(738,080.00) Sale Proceeds
1 $248,000.00 ($19,840.00) $228,160.00 ($70,000.00) $158,160.00 ($103,966.59) $54,193.41 $4,376,948.71 Sale @ 6% CAP
2 $260,400.00 ($20,832.00) $239,568.00 ($72,100.00) $167,468.00 ($103,966.59) $63,501.41 $(1,162,043.85) Loan Repayment
3 $273,420.00 ($21,873.60) $251,546.40 ($74,263.00) $177,283.40 ($103,966.59) $73,316.81 $(284,501.67) Sale Cost
4 $287,091.00 ($22,967.28) $264,123.72 ($76,490.89) $187,632.83 ($103,966.59) $83,666.24 $2,930,403.20 Sale Proceeds
5 $301,445.55 ($24,115.64) $277,329.91 ($78,785.62) $198,544.29 ($103,966.59) $94,577.70
6 $316,517.83 ($25,321.43) $291,196.40 ($81,149.19) $210,047.22 ($103,966.59) $106,080.62
7 $332,343.72 ($26,587.50) $305,756.22 ($83,583.66) $222,172.56 ($103,966.59) $118,205.97
8 $348,960.90 ($27,916.87) $321,044.03 ($86,091.17) $234,952.86 ($103,966.59) $130,986.27
9 $366,408.95 ($29,312.72) $337,096.23 ($88,673.91) $248,422.33 ($103,966.59) $144,455.73
10 $384,729.40 ($30,778.35) $353,951.05 ($91,334.12) $262,616.92 ($103,966.59) $3,089,053.53

21.94%Upon Sale:
$218,847.44 Cost Per Unit
$204.53 Cost Per Sqare Foot
11.38 Gross Rent Multiplier

$(1,175,955.50) $(738,080.00)
$54,193.41 $54,193.41
$63,501.41 $63,501.41
$73,316.81 $73,316.81
$83,666.24 $83,666.24
$94,577.70 $94,577.70
$106,080.62 $106,080.62
$118,205.97 $118,205.97
$130,986.27 $130,986.27
$144,455.73 $144,455.73
$3,089,053.52 $3,089,053.52
15% This is your IRR 21.94394%
This is how much more
you can pay to achieve
Buyer can pay $2,546,675.50 15% IRR $437,875.50
$437,875.50 at 8% vacancy