Determine Rent Price Factors for Multi-Family Apartment Profitability
Overview
This question evaluates financial modeling and analytics competencies — including rent pricing, break-even and ROI calculations, occupancy sensitivity, and cost-structure accounting — within the Analytics & Experimentation domain for a Data Scientist role.
Capital One
Aug 4, 2025, 10:55 AM
Data Scientist
Technical Screen
Analytics & Experimentation
0
0
Apartment Pricing and Break-even Analysis (100 Units)
Context
You are evaluating rent pricing for a 100-unit multifamily building. Assume the following annual inputs unless noted:
- Occupancy: 80% (i.e., 20% vacancy)
- Mortgage: 4.6% with given annual interest expense = $600,000
- Fixed operating costs: $400,000
- Variable operating costs: 10% of rent revenue
- Target ROI: 10% (useful for a target-profit scenario)
- Project size: 1,000,000 target annual profit if applicable)
Assume principal repayments are excluded from the profit calculation (i.e., treat interest as the financing cost), and there are 12 rent months per year.
Tasks
- List the key financial and operational factors to consider when setting monthly rent.
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Compute the minimum monthly rent per unit that:
- (a) Achieves break-even at 80% occupancy.
- (b) Achieves a 10% target annual profit on $10M (if you choose to include a target-profit scenario). State assumptions.
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If the unit rent is set to $1,200, what occupancy rate is required to maintain the same annual profit as in (2)?
- Provide the result for (a) break-even profit (i.e., profit = 0).
- If you computed (b) target profit, determine feasibility; if infeasible, explain why.
Solution
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