Need Clarification on Apartment pro forma

[Fred Sams]

Reviewing a deal I received from a broker "16 Unit Apartment Bldg". In the Five Year Pro

Forma, The Seller is reimbursing the 1st year management fees which is about 10 % of the net rental.

As well as the 1st year HOA Fees, Property Tax, & Insurance as paid through

a Sellers Credit COE (I assume COE to be Close of Escrow).

So now I am trying to create my Pro Forma for analysis I have a couple of questions so I want to clarify so I

can move this analysis forward.

1) Is 10 % a standard/or common % to determine/approximate Management Fees?

2) Given the context can I assume COE to mean Close of Escrow ?

3) Since I am constructing my Pro Forma where and how do I show these reimbursments,

do I carry them into year 2 as a credit or just not subtract them out from the

year 1 expenses?

Thanks

[Jeff Greenberg]

1) Is 10 % a standard/or common % to determine/approximate Management Fees?

Call some PM's in the area that do this size and class of property.  10% sounds about right to me

2) Given the context can I assume COE to mean Close of Escrow ? I would guess yes

3) Since I am constructing my Pro Forma where and how do I show these reimbursments,

I would not put these in at all.  after the first your they are gone.  This is a bonus.  I would be concerned why they are offering this. Is there a reason they need to sweeten the pot.  It DD time.

do I carry them into year 2 as a credit or just not subtract them out from the

year 1 expenses?  Answered above.