HP 12c Platinum - Before-Tax Reversions (Resale Proceeds)

Real Estate 13
Thus:
Effective Gross Income =Potential Gross Income - Vacancy Loss + Other Income.
Net Operating Income =Effective Gross Income - Operating Expenses.
Cash Throw-Off =Net Operating Income - Annual Dept Service.
Example: A 60 unit apartment building has rentals of $250 per unit per month. With a
5% vacancy rate, the annual operating cost is $76,855.
The property has just been financed with a $700,000 mortgage, fully amortized in a level
monthly payments at 11.5% over 20 years.
a. What is the Effective Gross Income?
b. What is the Net Operating Income?
c. What is the Cash Throw-Off to Equity?
12c platinum / 12C
RPN Keystrokes
12c platinum
ALG Keystrokes
Display Comments
gÂ
fCLEARG
60\
gÂ
fCLEARG
60§
250§12§ 250§12-
180,000.00
Potential Gross Income.
5b- 5b-
171,000.00
Effective Gross Income.
76855- 76855³
94,145.00
Net Operating Income.
20gA 20gAd
11.5gC 11.5gCd
700000$ 700000$
P12§ P§12+
-89,580.09
Annual Debt Service.
+ ~³
4,564.91
Cash Throw-Off.
Before-Tax Reversions (Resale Proceeds)
The reversion receivable at the end of the income projection period is usually based on
forecast or anticipated resale of the property at that time. The before tax reversion amount
applicable to real estate analysis and problems are:
• Sale Price.
• Cash Proceeds of Resale.
• Outstanding Mortgage Balance.
• Net Cash Proceeds of Resale to Equity.
The derivation of these reversions is as follows:
1. Forecast or estimate Sales Price. Deduct sales and Transaction Costs. The result is
the Proceeds of Resale.