Disposition Section

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Transcript

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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.

Transaction Costs

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.

Sale Price

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.