Location: Provo, UT
For Sale Website:
The Dean Apartment complex is located in Provo, Utah. The asking sale price is $2,600,000. Our model includes an income statement and balance sheet for projected financials for 15 years after buying the complex. We have made certain assumptions to calculate the financials.
The return that debtholders want is 7%. The equity holders want 17.5%. We assumed a tax rate of 35%. Our internal rate of return is 8.48% which exceeds our WACC of 6.59%, and means that we are over the expectations of the lenders and investors. This means that the price is a great price for these apartments and could be purchased to make quite a bit of money. We assumed a borrowing rate of 7%, which may not be attainable depending on the circumstances of the financing, so that would need to be adjusted on a case by case basis.
We didn’t actually visit the apartment complex to see the conditions of the units or the property. We only used what we could find on the internet for information. To be more accurate, I would suggest that the property be visited to see if there is any need for immediate repairs.