Welcome to this video. I will cover the expense section in the ARGUS Multi-Family Model. Let’s get into it. This section consists of two variables – the exit cap rate and the transaction cost.
Exit Cap Rate
I will input 5% as the exit cap rate. I can see the cap rate is sensitivity tested from 4% to 6% in this table. This gives me a better idea of what the net sale proceeds would be using different cap rates.
I will input 1.25% for the transaction cost. This means 1.25% of the gross value is used to pay for legal fees, broker commissions, and other relevant costs. After paying off the debt and transaction costs, I arrive at the net proceeds. The exit timing is consistent with the holding period – 120 months.
At last, the numbers in the middle row go into the calculation while the other numbers do not. Let’s go to the Annual Cash Flow Summary tab. I can see the sale is about 32 million dollars. The cost of sale is about 390,000 dollars. Debt repayment is about 12 million dollars. Everything looks good.
I have completed the disposition section in the ARGUS Multi-Family Model. Thanks for watching this video. I will see you in the next one.