Monthly archives "June 2011"

Private Money Or Not

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In today’s economy the use of private money had become more widespread. Why wouldn’t it? It had supplied us investors with a true need – funds. So private lending has a stigma? Private money, hard money and similar names had become associated with high interest rates and hefty fees and in many instances it’s true. But they don’t have to be in all cases. I don’t want to talk about if private money is good or bad. I want to explore the right use of it.

When To Use Private Money

If you are making a long-term investment then probably the use of private money is not the right way to go about it. It makes sense if you use it as part of a bridge or temporary financing in your purchase process. For example as a strategy to acquire the property until you have secured an institutional mortgage. When you conduct a short-term investment it MAY make more sense. You’ll still have to explore it on a case by case, which is what I have done in a fix and flip investment in Dallas.  Read More →

10 Main Steps For Successful Real Estate Investing

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Follow these steps to accomplish successful investmenting:

  1. Define a clear goal or goals. If multiple goals – prioritize.
  2. Build a team: mentor/expert, attorney, CPA, lender, and insurance agent.
  3. Decide on an investment philosophy: rental property, fix-and-flip, commercial, land, etc.
  4. Set your financials.  Down-payment required, available rates, and if needed get pre-qualified.
  5. Identify target areas that will help you accomplish your goal/s
  6. Interview service providers: Realtors, property managers, contractors, etc. Learn from them about the area.
  7. Have an investment plan: purchase, exit, and contingency methods.
  8. Identify the property.
  9. Put an offer and negotiate.
  10. Purchase and close on the property.

 

Invest on Auto Pilot

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Achieve your retirement dreams through smart leveraging and simple investments

The statistics about women and money are sobering. According to the National Center for Women and Retirement

Research, 75% of women are widowed at the average age of 56 and 1 in 4 of these women end up broke within 2 months of being widowed.

At some point in their life, 90% of women will be solely responsible for their family finances. As of this year, women control the majority of all the privately held financial assets in the United States.

A survey taken by the Transamerica Center for Retirement Studies found that, “three out of four women admit that they do not know as much as they should about retirement investing, and half said they are not confident in their ability to retire comfortably.”

Michelle Shaman is a native Californian who has been personally involved in real estate and investing for more than 20 years. Michelle strives to empower women with the investment knowledge they need to be successful in securing their own future and the future of their families. Through her smart leveraging program, Michelle shows women how to take control of their own assets, allowing them to relax and enjoy their lives, focusing on what matters most to them.

Retirement by default is easy. It takes no effort; you simply place all of your trust in others to control your assets; others who have much less incentive than you do to

make sure your retirement funds are designed to meet your retirement goals. And you pay them a fee, whether you make money or not.

Utilizing well crafted investment methods that she shares with her clients, Michelle helps women to create a retirement by design, rather than by default.

Achieve your retirement dreams through smart leveraging and simple investments Invest on Auto Pilot

Women under Michelle’s tutelage learn about smart leveraging techniques and how to have clear and specific goals for their retirement. They learn how to devise a simple, easy to follow plan that they can comfortably execute. Read More →

18716 Sagewood Dr., Dallas

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18716 Sagewood DR, Dallas

Category: Fix and Flip

Market Value: $220,000 (Market rent: $1,700/month)

PURCHASE COSTS:
Purchase Price ($160,000.00)
Inspection(s) ($275.00)
Appraisal(s) ($450.00)
Survey(s) ($275.00)
Lender Fees/Costs ($2,000.00)
Closing Costs ($1,000.00)
Other $0.00
Total: -$164,000.00
REHAB COSTS:
Labor (from page 2) ($16,000.00)
Materials (from page 2) $0.00
Total: -$16,000.00
HOLDING COSTS:
Mortgage Payments ($2,300.00)
Property Taxes ($1,100.00)
Insurance ($300.00)
Utilities ($500.00)
Lawn Care ($150.00)
Other $0.00
Total: -$4,350.00
SELLING COSTS:
Selling Price $220,000.00
Commission To Agents ($13,200.00)
Buyer Home Warranty ($350.00)
Buyer Termite Letter $0.00
Buyer’s Closing Costs ($2,200.00)
Seller’s Closing Costs ($500.00)
Total: $203,750.00
PROFIT: $19,400.00

[srp_profile lat="33.006238" lng="-96.78380500000003" address="18716 Sagewood DR" city="Dallas" state="TX" zip_code="75252"]

[/srp_profile]

 

Dallas median sales prices

2512 Lawndale, Plano (Dallas) – Fix and Flip

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2512 Lawndale, Plano Analysis Report

Category: Fix and Flip

 

PURCHASE COSTS:
Purchase Price ($129,900.00)
Inspection(s) ($275.00)
Appraisal(s) ($450.00)
Survey(s) ($275.00)
Lender Fees/Costs ($2,000.00)
Closing Costs ($1,000.00)
Other $0.00
Total: -$133,900.00
REHAB COSTS:
Labor (from page 2) ($20,000.00)
Materials (from page 2) $0.00
Total: -$20,000.00
HOLDING COSTS:
Mortgage Payments ($2,000.00)
Property Taxes ($1,000.00)
Insurance ($300.00)
Utilities ($500.00)
Lawn Care ($150.00)
Other $0.00
Total: -$3,950.00
SELLING COSTS:
Selling Price $180,000.00
Commission To Agents ($10,800.00)
Buyer Home Warranty ($350.00)
Buyer Termite Letter $0.00
Buyer’s Closing Costs ($1,800.00)
Seller’s Closing Costs ($500.00)
Total: $166,550.00
PROFIT: $8,700.00

 

[srp_profile lat="33.04639" lng="-96.74283200000002" address="2512 Lawndale" city="Plano" state="TX" zip_code="75023"]

[/srp_profile]

Plano median sales prices

Anchor, Plano, TX Flip (Dallas)

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Anchor, Plano, TX – Analysis

Category: Fix and Flip Property

Bedrooms: 4 | Bathrooms: 2 | Sqft: 2,209 | Type: Single Family | Built: 1986


Estimated Project Duration 3 Months
PURCHASE COSTS:
Purchase Price ($153,000.00)
Inspection(s) ($275.00)
Appraisal(s) ($450.00)
Survey(s) ($275.00)
Lender Fees/Costs ($2,000.00)
Closing Costs ($1,000.00)
Other $0.00
Total: -$157,000.00
REHAB COSTS:
Estimated Labor & Materials ($15,000.00)
Total: -$15,000.00
HOLDING COSTS:
Mortgage Payments ($2,000.00)
Property Taxes ($1,000.00)
Insurance ($300.00)
Utilities ($500.00)
Lawn Care ($150.00)
Other ($100.00)
Total: -$4,050.00
SELLING COSTS:
Selling Price $200,000.00
Commission To Agents ($12,000.00)
Buyer Home Warranty ($500.00)
Buyer Termite Letter $0.00
Buyer’s Closing Costs ($2,000.00)
Seller’s Closing Costs ($500.00)
Total: $185,000.00
PROFIT: $8,950.00

[srp_profile lat="33.0618903" lng="-96.7569724" address="Anchor" city="Plano" state="TX" zip_code="75023"]

[/srp_profile]

1622 Live Oak Lane Allen Tx (Dallas)

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Property Report : 1622 Live Oak Lane Allen Tx

Category: Rental Property

Price: $136,300 Rent: $1650/month

Disclaimer
This tool is provided “As Is”. All information is believed to be accurate, but not guaranteed. It is intended for the purpose of illustrative projections. The information provided is not intended to replace or substitute any legal, accounting, investment, real estate, tax or other professional advice, consultation or service. The author of this tool is not responsible nor liable for any damages arising from the use of the tool.

Executive Summary

Property Description

Name 1622 Live Oak Lane Allen Tx
Address 1622 Live Oak Lane, Allen
Type Singlefamily
Size 2677 SF
Rooms 4 bed. + 3 bath.
Purchase Price $ 136,300
Rent $ 1,650/month

Financing Overview

Purchase Price $ 136,300
Down Payment $ 27,260
Mortgage (30yr @ 5.50%) $ 109,040
Loan-to-Value (LTV) 80.00 %
Closing Costs $ 2,000
Total Aquisition Cost $ 140,300

Income, Expenses and Cash Flow (Year 1)

Gross Operating Income (GOI) $ 18,810
Total Expenses $ 6,948
Net Operating Income (NOI) $ 11,862
Annual Debt Service $ 7,429
Rehabilitaion $ 2,000
Cash Flow Before Taxes (CFBT) $ 2,433
Income Tax Liability $ 0
Cash Flow After Taxes (CFAT) $ 2,433

Financial Analysis

Holding period of 15 years and discount rate of 10% were used for calculation of NPV and IRR. The rest of the financial measures are for the 1st year only and therefore doesn’t provide such exact information.

Net Present Value (NPV) $ 90,484
Internal Rate of Return (IRR) 17.72 %
Cash on Cash Return 14.18 %
Return on Equity (ROE) 7.78 %
Capitalization Rate 8.70 %
Gross Rent Multiplier (GRM) 6.88
Debt-coverage Ratio (DCR) 2.67
Operating Expense Ratio (OER) 36.94 %

Resale Analysis

Sale Price in year 15 (Appreciation:1%) $ 174,145
Sale Proceeds (Before Tax) $ 86,184
Optimal Holding Period (based on NPV) 30 year
 

Property Description

Price $ 136,300
Address 1622 Live Oak Lane, Allen, 75002, TX
Country US
Year Built 1992
Type Singlefamily
Size 2677 SF
Number of Bedrooms 4
Number of Bathrooms 3

Operation Effectiveness

The Annual Property Operating Data

Incomes % of GOI
Gross Scheduled Rent Income $ 19,800
Total Gross Income $ 19,800
Vacancy loss $ 990
Gross Operating Income $ 18,810 100.00 %
Expenses
Repairs $ 594 3.16 %
Manager $ 1,782 9.47 %
Prop_Taxes $ 3,972 21.12 %
Prop_Insurance $ 600 3.19 %
Total Expenses $ 6,948 36.94 %
Net Operating Income $ 11,862 63.06 %

Cash Flow (1st year)

Net Operating Income $ 11,862 63.06 %
Annual Debt Service $ 7,429 39.50 %
Rehabilitation $ 2,000 10.63 %
Cash Flow Before Taxes (CFBT) $ 2,433 12.93 %
Income Tax Liability $ 0 0.00 %
Cash Flow After Taxes (CFAT) $ 2,433 12.93 %

Gross scheduled income (GSI)

represents the total of monthly rents for the particular property, including the potential rents from vacant units and uncollectable rents.

Vacancy and Credit Loss

represents the part of the potential rental income that is lost because of unoccupied units or uncollectable rent from tenants.

Gross Operating Income (GOI)

is the actual income which is expected to be collected in the property.

Operating Expenses

are expenses necessary for maintaining the property and ensuring its continued ability to produce income (doesn’t include mortgage payments or depreciation).

Net Operating Income (NOI)

is simply the gross operating income minus operating expenses.

Operating Ratios

Operating Expense Ratio 36.94 %
Break-Even Ratio 69.93 %

Cash Flow

represents all the inflows and outflows of cash for a certain property (including mortgage payments). We can calculate cash flow before taxes (CFBT) or cash flow after taxes (CFAT) which is CFBT minus any tax liability arising from the operation of the property.

Operating Expense Ratio

is the ratio of the operating expenses to the gross operating income (GOI).

Break-Even Ratio (BER)

is another benchmark used by mortgage lenders. It estimates how vulnerable is a certain property to defaulting on its mortgage if part of the rental income is declined. Most of the lenders are looking for BER of 85% or less.

Financial Effectiveness

Financial Measures

Net Present Value $ 90,484
Internal Rate of Return 17.72 %
Profitability Index 3.89
House P/E Ratio 2.64
Annual Depreciation $ 3,965

Holding period of 15 years and discount rate of 10% were used for calculation of NPV and IRR. The rest of the financial measures are for the 1st year only and therefore don’t provide such an exact information.

Net Present Value (NPV)

is probably the best measure of any investment thanks to its complexity. It takes into account all future cash flows including the selling price, and it converts all these amounts to their present values using discount rate required by the investor. Therefore in contrast from most of the measurements, NPV count fully with the time value of money. More information and example is on the blog.

Internal Rate of Return (IRR)

is a rate which an investment will return over the estimated period of ownership. It is in fact the discount rate that produces NPV of zero.

Profitability Index

is very similar to NPV. It also calculates with the present values of future cash flows and discount rate, therefore it takes in account the time value of money. Profitability index is a ratio which shows if the present value of the cash flows is worth the initial investment.

House P/E Ratio

is often used when measuring other investment tools, such as stocks. The Real Estate P/E ratio counts with the initial investment and annual net operating income.

Investment Return Ratios

Cash on Cash Return 14.18 %
Return on Investment 18.54 %
Return on Equity 7.78 %
Capitalization Rate 8.70 %
Gross Rental Yield 14.53 %
Gross Rent Multiplier 6.88

Cash on Cash Return

is in fact equity dividend rate. It is a ratio between annual cash flow before taxes and the total initial investment, expressed as a percentage. It is not an exact measurement of an investment, because it does not take in account the future value of money.

Return on Investment

is very similar to Cash on Cash Return, but also takes in account appreciation of the property in the first year.

Return on Equity

is one of the financial measures used as well on other types of investments. In Real Estate the return means cash flow after taxes (CFAT) and equity is the initial investment.

Gross Rental Yield

can be used for a particular property or also as a market indicator when using median values of rent and house prices. It is counted from gross scheduled rent and initial investment.

Capitalization Rate

is calculated as ratio of the net operating income and the value of the property. It is in fact the discount rate, used for discounting the future income to determine its present value.

Gross Rent Multiplier

is counted as a ratio of market value of the property and gross scheduled income.

Financing Overview and Analysis

Acquisition Cost
Purchase Price $ 136,300
Closing Costs $ 2,000
Loan Costs $ 2,000
Total $ 140,300
Financing % of Acq.
Down Payment + Costs $ 27,260 19.43 %
Mortgage $ 109,040 77.72 %
Loan to Value Ratio 80.00 %
Debt Coverage Ratio 2.67
Mortgage
Mortgage Amount $ 109,040
Length 30 years
Interest Rate 5.50 %
Monthly Payment $ 619.1

Long Term Financial Forecast


 

 

 

Year 0 1 5 10 15
Operational Analysis
Gross Scheduled Income $ 0 $ 19,800 $ 20,604 $ 21,655 $ 22,760
Vacancy Loss $ 0 $ 990 $ 1,030 $ 1,083 $ 1,138
Gross Operating Income $ 0 $ 18,810 $ 19,574 $ 20,572 $ 21,622
Expenses $ 0 $ 6,948 $ 7,230 $ 7,599 $ 7,986
Net Operating Income $ 0 $ 11,862 $ 12,344 $ 12,973 $ 13,635
Financing
Mortgage Payment $ 0 $ 7,429 $ 7,429 $ 7,429 $ 7,429
Payment Interest Part $ 0 $ 5,961 $ 5,600 $ 5,022 $ 4,263
Payment Principal Part $ 0 $ 1,469 $ 1,829 $ 2,407 $ 3,167
Cash Flow
Rehabilitation $ 0 $ 2,000 $ 0 $ 0 $ 0
Cash Flow Before Taxes $ -31,260 $ 2,433 $ 4,914 $ 5,544 $ 6,206
Depreciation $ 0 $ 3,965 $ 3,965 $ 3,965 $ 3,965
Taxes $ 0 $ 0 $ 0 $ 0 $ 0
Cash Flow After Taxes $ -31,260 $ 2,433 $ 4,914 $ 5,544 $ 6,206


 

Resale Analysis

Resale Price Evaluation Methods

The property is sold after 15 years.

Appreciation (1.00%) $ 174,145
Cap Rate (8.70%) & NOI $ 156,673
Gross Rent Multiplier $ 156,673

Sale Proceeds

In the resale analysis we don’t count with taxes which might occur when selling the property. The tax laws for the resale are rather complex and subjected to frequent changes, and are different in every country.

Projected Selling Price $ 174,145
Costs of Sale (7.00%) $ 12,190
Mortgage Balance Payoff $ 75,772
Early Payoff Penalty (0.00 %) $ 0
Sale Proceeds Before Tax $ 86,184

Net Assets and Yield

Net Assets
Sale Proceeds Before Tax $ 86,184
Down Payment $ 27,260
Net Assets $ 58,924
Yield
Annual Net Assets $ 3,928
Average Cash Flow (After Taxes) $ 5,167
Average Annual Yield $ 9,095
Average Annual Return 6.67 %

Optimal Holding Period based on NPV

Holding Period 30 years
Max NPV $ 200,977

Sensitivity Analysis

Loan to Value ratio

Your current LTV ratio is: 80.00%.

LTV NPV IRR
80.00 % $ 90,484 17.72 %
0% $ -26,316 7.31 %
10% $ -19,750 7.81 %
20% $ -13,183 8.41 %
30% $ -6,617 9.12 %
40% $ -51 9.99 %
50% $ 6,516 11.08 %
60% $ 13,082 12.52 %
70% $ 19,649 14.55 %
80% $ 26,215 17.72 %
90% $ 32,781 23.93 %

This sensitivity analysis is using the configured holding period, the length and interest rate of the first mortgage and discount rate of 10%. It counts only with a conventional type of loan.

Mortgage Ammortization (Length)

Your current mortgage ammortization is 30 years.

Years NPV IRR
30 $ 90,484 17.72 %
5 $ -12,021 8.22 %
10 $ -4,532 9.08 %
15 $ 1,404 10.38 %
20 $ 14,262 14.06 %
25 $ 21,607 16.31 %
30 $ 26,215 17.72 %

This sensitivity analysis is using the loan amount and interest rate of the first mortgage and discount rate of 10%. It counts only with a conventional type of loan.

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913 S 115th Dr, Avondale, AZ (Phoenix)

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Property Report : 913 S 115th Dr, Avondale, AZ

Category: Rental Property

Download PDF Report

Disclaimer

This tool is provided “As Is”. All information is believed to be accurate, but not guaranteed. It is intended for the purpose of illustrative projections. The information provided is not intended to replace or substitute any legal, accounting, investment, real estate, tax or other professional advice, consultation or service. The author of this tool is not responsible nor liable for any damages arising from the use of the tool.

Executive Summary

Property Description

Name 913 S 115th Dr, Avondale, AZ
Address 913 S 115th Dr, Avondale
Type Singlefamily
Size 1495 SF
Rooms 4 bed. + 2 bath.
Purchase Price $ 85,000
Rent $ 950/month

Financing Overview

Purchase Price $ 85,000
Down Payment $ 17,000
Mortgage (yr @ 5.50%) $ 68,000
Loan-to-Value (LTV) 80.00 %
Closing Costs $ 2,000
Total Aquisition Cost $ 89,000

Income, Expenses and Cash Flow (Year 1)

Gross Operating Income (GOI) $ 10,830
Total Expenses $ 3,258
Net Operating Income (NOI) $ 7,572
Annual Debt Service $ 0
Rehabilitaion $ 0
Cash Flow Before Taxes (CFBT) $ 7,572
Income Tax Liability $ 0
Cash Flow After Taxes (CFAT) $ 7,572

Financial Analysis

Holding period of 15 years and discount rate of 10% were used for calculation of NPV and IRR. The rest of the financial measures are for the 1st year only and therefore doesn’t provide such exact information.

Net Present Value (NPV) $ 140,797
Internal Rate of Return (IRR) 38.09 %
Cash on Cash Return 36.06 %
Return on Equity (ROE) 36.06 %
Capitalization Rate 8.91 %
Gross Rent Multiplier (GRM) 7.46
Debt-coverage Ratio (DCR) 0.00
Operating Expense Ratio (OER) 30.08 %

Resale Analysis

Sale Price in year 15 (Appreciation:1%) $ 110,292
Sale Proceeds (Before Tax) $ 102,572
Optimal Holding Period (based on NPV) 30 years

Property Description

Good condition 4 bedroom home. Open family room, kithcen with breakfast bar and breakfast nook, 9\’ flat ceilings throughout. Nice private cul-de-sac location.

Price $ 85,000
Address 913 S 115th Dr, Avondale, 85323 , AZ
Country US
Year Built 2004
Type Singlefamily
Size 1495 SF
Number of Bedrooms 4
Number of Bathrooms 2

Operation Effectiveness

The Annual Property Operating Data

Incomes % of GOI
Gross Scheduled Rent Income $ 11,400
Total Gross Income $ 11,400
Vacancy loss $ 570
Gross Operating Income $ 10,830 100.00 %
Expenses
Repairs $ 480 4.43 %
Manager $ 1,026 9.47 %
Prop_Taxes $ 852 7.86 %
Prop_Insurance $ 540 4.99 %
HOA $ 360 3.32 %
Total Expenses $ 3,258 30.08 %
Net Operating Income $ 7,572 69.92 %

Cash Flow (1st year)

Net Operating Income $ 7,572 69.92 %
Annual Debt Service $ 0 0.00 %
Rehabilitation $ 0 0.00 %
Cash Flow Before Taxes (CFBT) $ 7,572 69.92 %
Income Tax Liability $ 0 0.00 %
Cash Flow After Taxes (CFAT) $ 7,572 69.92 %

Gross scheduled income (GSI)

represents the total of monthly rents for the particular property, including the potential rents from vacant units and uncollectable rents.

Vacancy and Credit Loss

represents the part of the potential rental income that is lost because of unoccupied units or uncollectable rent from tenants.

Gross Operating Income (GOI)

is the actual income which is expected to be collected in the property.

Operating Expenses

are expenses necessary for maintaining the property and ensuring its continued ability to produce income (doesn’t include mortgage payments or depreciation).

Net Operating Income (NOI)

is simply the gross operating income minus operating expenses.

Operating Ratios

Operating Expense Ratio 30.08 %
Break-Even Ratio 75.65 %

Cash Flow

represents all the inflows and outflows of cash for a certain property (including mortgage payments). We can calculate cash flow before taxes (CFBT) or cash flow after taxes (CFAT) which is CFBT minus any tax liability arising from the operation of the property.

Operating Expense Ratio

is the ratio of the operating expenses to the gross operating income (GOI).

Break-Even Ratio (BER)

is another benchmark used by mortgage lenders. It estimates how vulnerable is a certain property to defaulting on its mortgage if part of the rental income is declined. Most of the lenders are looking for BER of 85% or less.

Financial Effectiveness

Financial Measures

Net Present Value $ 140,797
Internal Rate of Return 38.09 %
Profitability Index 7.70
House P/E Ratio 2.77
Annual Depreciation $ 2,473

Holding period of 15 years and discount rate of 10% were used for calculation of NPV and IRR. The rest of the financial measures are for the 1st year only and therefore don’t provide such an exact information.

Net Present Value (NPV)

is probably the best measure of any investment thanks to its complexity. It takes into account all future cash flows including the selling price, and it converts all these amounts to their present values using discount rate required by the investor. Therefore in contrast from most of the measurements, NPV count fully with the time value of money. More information and example is on the blog.

Internal Rate of Return (IRR)

is a rate which an investment will return over the estimated period of ownership. It is in fact the discount rate that produces NPV of zero.

Profitability Index

is very similar to NPV. It also calculates with the present values of future cash flows and discount rate, therefore it takes in account the time value of money. Profitability index is a ratio which shows if the present value of the cash flows is worth the initial investment.

House P/E Ratio

is often used when measuring other investment tools, such as stocks. The Real Estate P/E ratio counts with the initial investment and annual net operating income.

Investment Return Ratios

Cash on Cash Return 36.06 %
Return on Investment 40.11 %
Return on Equity 36.06 %
Capitalization Rate 8.91 %
Gross Rental Yield 13.41 %
Gross Rent Multiplier 7.46

Cash on Cash Return

is in fact equity dividend rate. It is a ratio between annual cash flow before taxes and the total initial investment, expressed as a percentage. It is not an exact measurement of an investment, because it does not take in account the future value of money.

Return on Investment

is very similar to Cash on Cash Return, but also takes in account appreciation of the property in the first year.

Return on Equity

is one of the financial measures used as well on other types of investments. In Real Estate the return means cash flow after taxes (CFAT) and equity is the initial investment.

Gross Rental Yield

can be used for a particular property or also as a market indicator when using median values of rent and house prices. It is counted from gross scheduled rent and initial investment.

Capitalization Rate

is calculated as ratio of the net operating income and the value of the property. It is in fact the discount rate, used for discounting the future income to determine its present value.

Gross Rent Multiplier

is counted as a ratio of market value of the property and gross scheduled income.

Financing Overview and Analysis

Acquisition Cost
Purchase Price $ 85,000
Closing Costs $ 2,000
Loan Costs $ 2,000
Total $ 89,000
Financing % of Acq.
Down Payment + Costs $ 17,000 19.10 %
Mortgage $ 68,000 76.40 %
Loan to Value Ratio 80.00 %
Debt Coverage Ratio 0.00
Mortgage
Mortgage Amount $ 68,000
Length years
Interest Rate 5.50 %
Monthly Payment $ 0.00

Long Term Financial Forecast

Year 0 1 5 10 15
Operational Analysis
Gross Scheduled Income $ 0 $ 11,400 $ 11,863 $ 12,468 $ 13,104
Vacancy Loss $ 0 $ 570 $ 593 $ 623 $ 655
Gross Operating Income $ 0 $ 10,830 $ 11,270 $ 11,845 $ 12,449
Expenses $ 0 $ 3,258 $ 3,390 $ 3,563 $ 3,745
Net Operating Income $ 0 $ 7,572 $ 7,880 $ 8,282 $ 8,704
Financing
Mortgage Payment $ 0 $ 0 $ 0 $ 0 $ 0
Payment Interest Part $ 0 $ 0 $ 0 $ 0 $ 0
Payment Principal Part $ 0 $ 0 $ 0 $ 0 $ 0
Cash Flow
Rehabilitation $ 0 $ 0 $ 0 $ 0 $ 0
Cash Flow Before Taxes $ -21,000 $ 7,572 $ 7,880 $ 8,282 $ 8,704
Depreciation $ 0 $ 2,473 $ 2,473 $ 2,473 $ 2,473
Taxes $ 0 $ 0 $ 0 $ 0 $ 0
Cash Flow After Taxes $ -21,000 $ 7,572 $ 7,880 $ 8,282 $ 8,704

Resale Analysis

Resale Price Evaluation Methods

The property is sold after 15 years.

Appreciation (1.00%) $ 110,292
Cap Rate (8.91%) & NOI $ 97,688
Gross Rent Multiplier $ 97,705

Sale Proceeds

In the resale analysis we don’t count with taxes which might occur when selling the property. The tax laws for the resale are rather complex and subjected to frequent changes, and are different in every country.

Projected Selling Price $ 110,292
Costs of Sale (7.00%) $ 7,720
Sale Proceeds Before Tax $ 102,572

Net Assets and Yield

Net Assets
Sale Proceeds Before Tax $ 102,572
Down Payment $ 17,000
Net Assets $ 85,572
Yield
Annual Net Assets $ 5,705
Average Cash Flow (After Taxes) $ 8,126
Average Annual Yield $ 13,831
Average Annual Return 16.27 %

Optimal Holding Period based on NPV

Holding Period 30 years
Max NPV $ 172,201

Sensitivity Analysis

Loan to Value ratio

Your current LTV ratio is: 80.00%.

LTV NPV IRR
80.00 % $ 140,797 38.09 %
0% $ -3,694 9.48 %
10% $ 401 10.06 %
20% $ 4,496 10.73 %
30% $ 8,591 11.52 %
40% $ 12,686 12.49 %
50% $ 16,781 13.67 %
60% $ 20,876 15.23 %
70% $ 24,971 17.33 %
80% $ 29,066 20.61 %
90% $ 33,161 26.66 %

This sensitivity analysis is using the configured holding period, the length and interest rate of the first mortgage and discount rate of 10%. It counts only with a conventional type of loan.

Mortgage Ammortization (Length)

Your current mortgage ammortization is years.

Years NPV IRR
$ 140,797 38.09 %
5 $ 5,221 11.04 %
10 $ 9,892 12.60 %
15 $ 13,593 14.50 %
20 $ 21,612 17.53 %
25 $ 26,193 19.38 %
30 $ 29,066 20.61 %

This sensitivity analysis is using the loan amount and interest rate of the first mortgage and discount rate of 10%. It counts only with a conventional type of loan.