Exam 1: Part 1 Take Home Assignment

September 20, 2016 at 9:14 pm  •  Posted in f16-econ491 by  •  1 Comment

Instructions for Exam 1: Part 1 Take Home Assignment

Students have each been assigned 3 single-family residential properties on Pueblo’s Eastside. You can find your property assignments on this shared spreadsheet. Note: these properties sold at some point during 2014 and the selling price is provided on the spreadsheet in Column I, “Selling Price”.

For each assigned property complete the following steps:

  • (1) Prepare an ROI analysis using the following assumptions:
    • 30-year fixed-rate mortgage
    • 5% interest rate
    • 20% down payment
    • Set 2014 as Year 1, 2015 as Year 2, 2016 as Year 3 and 2017 as Year 4
    • Use the 2014 Selling Price as the “Property Value” in Year 1 (Row 3)
    • Use 4% for value appreciation
    • Use 6% for rent appreciation
    • Use Craigslist (or other web resource) to estimate market rent
    • Look up property taxes on the Pueblo County Assessor’s website
    • Use 1% of selling price to estimate property insurance
    • Use 3% of selling price to estimate Maintenance, Repairs and Misc expenses
  • (2) Estimate the current market value of the property using Comparable Sales Analysis
    • Identify 3 comparable properties sold in 2015 or 2016
    • Calculate average Price per Square Foot
    • Apply Price per Square Foot to your subject property
    • Make adjustments up or down as you deem appropriate
  • (3) Write a 1-page report
    • Copy-paste your ROI table (Columns A-E, Rows 1-24)
    • List assumed 1st year Rent and last year’s Property Tax amount
    • Describe your Comparable Sales Analysis and how you arrived at your current valuation estimate
    • What are the pros and cons of this property as an investment?
    • Did the 2014 buyer get a good deal?

Once you’ve completed your 3 property assessments, write a 1-page paper providing a summary of your analysis and comparing the 3 properties. Which property is the best investment? Which one is the worst? Why?

What to submit:

  • 3 Property reports with ROI and Comparable Sales analyses
  • 1-Page Summary and Comparison report
  • You should have 4-8 pages total.
  • Bring to the in-class exam on Wed, Sep 28




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