Aproperty consists of 8 office suites, 3 on the first floor and 5 on the second floor. the contract rents are as follows: 2 suites at $1,800 per month, 1 at $3,600 per month and 5, at $1,560 per month. annual market rent for all suites increase 3% per year after the first year. vacancy and collection losses are estimated at 10% of potential gross rent per year. operating expenses and reserve for replacement or capital expenditures are 45% of effective gross income each year. the expected holding period is 5 years. at the end of the holding period you are expecting to sell the property for $1,180,472.a. prepare the first year pro forma generating the noi for year 1.

$89,100

Explanation:

Let us first calculate annual gross rent for Year 1:

Total rent per month:

= 2 suites at $1,800 + 1 suites at $3,600 + 5 suites at $1,560

= $3,600 + $3,600 + $7,800

= $15,000

Annual gross rent = Total rent per month × 12

                              = $15,000 × 12

                              = $180,000

Effective gross revenue = Potential gross rent revenue - Vacancy and connection losses (10% of potential gross rent)

                                        = $180,000 - $18,000

                                        = $162,000

Net operating income = Effective gross revenue - Operating expenses including depreciation

                                      = $162,000 - $72,900

                                      = $89,100

if you use only 25 for your entertainment and only 200 for the groceries that you really need and take out the 50 per month for the computer then that should be enough