Exam 1: Part 1 Take Home Assignment
September 20, 2016
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