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