4502 Courtside Dr. Mckinney Tx

Property Report : 4502 Courtside Dr. Mckinney Tx

Category: Rental property 

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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

Name4502 Courtside Dr. Mckinney Tx
Address4502 Courtside Dr, Mckinney
Size2098 SF
Rooms4 bed. + 2 bath. + 1 kitchens
Purchase Price$ 127,000
Rent$ 1,350/month

Financing Overview

Purchase Price$ 127,000
Down Payment$ 25,400
Mortgage (30yr @ 5.50%)$ 101,600
Loan-to-Value (LTV)80.00 %
Closing Costs$ 2,000
Total Aquisition Cost$ 130,500

Income, Expenses and Cash Flow (Year 1)

Gross Operating Income (GOI)$ 15,390
Total Expenses$ 3,041
Net Operating Income (NOI)$ 12,349
Annual Debt Service$ 6,922
Rehabilitaion$ 0
Cash Flow Before Taxes (CFBT)$ 5,427
Income Tax Liability$ 0
Cash Flow After Taxes (CFAT)$ 5,427

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)$ 83,056
Internal Rate of Return (IRR)21.97 %
Cash on Cash Return18.78 %
Return on Equity (ROE)18.78 %
Capitalization Rate9.72 %
Gross Rent Multiplier (GRM)7.84
Debt-coverage Ratio (DCR)2.34
Operating Expense Ratio (OER)19.76 %

Resale Analysis

Sale Price in year 15 (Appreciation:1%)$ 147,443
Sale Proceeds (Before Tax)$ 66,520
Optimal Holding Period (based on NPV)30 years

Property Description

Lovely home located in the desirable Legends of McKinney with shopping and Recognized schools in close proximity. Fresh paint and new carpet makes this home move-in ready! Versatile floorplan includes french doors to study (also listed as second bedroom). Large living areas, spacious kitchen & more

Price$ 127,000
Address4502 Courtside Dr, Mckinney, 75070, TN
Year Built1999
Size2098 SF
Number of Bedrooms4
Number of Bathrooms2
Number of Kitchens1

Operation Effectiveness

The Annual Property Operating Data

Incomes% of GOI
Gross Scheduled Rent Income$ 16,200
Total Gross Income$ 16,200
Vacancy loss$ 810
Gross Operating Income$ 15,390100.00 %
Repairs$ 5993.89 %
Manager$ 1,4589.47 %
Prop_Taxes$ 3242.11 %
Prop_Insurance$ 6594.28 %
Total Expenses$ 3,04119.76 %
Net Operating Income$ 12,34980.24 %

Cash Flow (1st year)

Net Operating Income$ 12,34980.24 %
Annual Debt Service$ 6,92244.98 %
Rehabilitation$ 00.00 %
Cash Flow Before Taxes (CFBT)$ 5,42735.26 %
Income Tax Liability$ 00.00 %
Cash Flow After Taxes (CFAT)$ 5,42735.26 %

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 Ratio19.76 %
Break-Even Ratio79.42 %

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$ 83,056
Internal Rate of Return21.97 %
Profitability Index3.87
House P/E Ratio2.34
Annual Depreciation$ 3,695

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 Return18.78 %
Return on Investment23.17 %
Return on Equity18.78 %
Capitalization Rate9.72 %
Gross Rental Yield12.76 %
Gross Rent Multiplier7.84

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$ 127,000
Closing Costs$ 2,000
Loan Costs$ 1,500
Total$ 130,500
Financing% of Acq.
Down Payment + Costs$ 25,40019.46 %
Mortgage$ 101,60077.85 %
Loan to Value Ratio80.00 %
Debt Coverage Ratio2.34
Mortgage Amount$ 101,600
Length30 years
Interest Rate5.50 %
Monthly Payment$ 576.87

– Down Payment
– Closing Costs
– Loan Costs
– Mortgage

This chart shows the process of accumulation of the equity which belongs to the investor. There is some equity right from the beginning – the down payment. Over the time the equity is rising by paying off the principal of the mortgage and also by appreciation over the years.
Basically all the green parts is the cummulative equity belonging to the investor and the red part belongs to the bank.

Long Term Financial Forecast

Full View

Operational Analysis
Gross Scheduled Income$ 0$ 16,200$ 16,858$ 17,718$ 18,621
Vacancy Loss$ 0$ 810$ 843$ 886$ 931
Gross Operating Income$ 0$ 15,390$ 16,015$ 16,832$ 17,690
Expenses$ 0$ 3,041$ 3,164$ 3,326$ 3,495
Net Operating Income$ 0$ 12,349$ 12,851$ 13,506$ 14,195
Mortgage Payment$ 0$ 6,922$ 6,922$ 6,922$ 6,922
Payment Interest Part$ 0$ 5,554$ 5,218$ 4,680$ 3,972
Payment Principal Part$ 0$ 1,369$ 1,705$ 2,243$ 2,951
Cash Flow
Rehabilitation$ 0$ 0$ 0$ 0$ 0
Cash Flow Before Taxes$ -28,900$ 5,427$ 5,928$ 6,584$ 7,273
Depreciation$ 0$ 3,695$ 3,695$ 3,695$ 3,695
Taxes$ 0$ 0$ 0$ 0$ 0
Cash Flow After Taxes$ -28,900$ 5,427$ 5,928$ 6,584$ 7,273


Resale Analysis

Resale Price Evaluation Methods

The property is sold after 15 years.

Appreciation (1.00%)$ 147,443
Cap Rate (9.72%) & NOI$ 146,041
Gross Rent Multiplier$ 145,983

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$ 147,443
Costs of Sale (7.00%)$ 10,321
Mortgage Balance Payoff$ 70,602
Early Payoff Penalty (0.00 %)$ 0
Sale Proceeds Before Tax$ 66,520

Net Assets and Yield

Net Assets
Sale Proceeds Before Tax$ 66,520
Down Payment$ 25,400
Net Assets$ 41,120
Annual Net Assets$ 2,741
Average Cash Flow (After Taxes)$ 6,330
Average Annual Yield$ 9,071
Average Annual Return7.14 %

Optimal Holding Period based on NPV

Holding Period30 years
Max NPV$ 186,949

– Sale Proceeds

– Costs of Sale

– Mortgage Balance Payoff
– Early Payoff Penalty


This charts shows Net Present Value (NPV) when property is sold in various years, i.e. when sold in 5th year, the NPV is calculated from 5 years of Cash Flow (including the selling price) and this NPV is displayed in year 5. Optimal holding period can be estimated, using this method – when NPV is the highest. Please note that appreciation growth can change these numbers severely. It has sometime sense to sell the property even before the end of the mortgage period.


This chart shows the ratio of Cash Flow After Taxes and the accumulatd equity in each year. When the return on equity starts going substantially lower, it indicates possibility of sale. However this method isn’t as accurate as the NPV method above.

Sensitivity Analysis

Loan to Value ratio

Your current LTV ratio is: 80.00%.

80.00 %$ 83,05621.97 %
0%$ -15,4978.24 %
10%$ -9,3798.84 %
20%$ -3,2609.56 %
30%$ 2,85810.42 %
40%$ 8,97711.50 %
50%$ 15,09512.89 %
60%$ 21,21314.75 %
70%$ 27,33217.46 %
80%$ 33,45021.97 %
90%$ 39,56832.03 %

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.

30$ 83,05621.97 %
5$ -2,1779.63 %
10$ 4,80111.16 %
15$ 10,33213.48 %
20$ 22,31317.77 %
25$ 29,15720.31 %
30$ 33,45021.97 %

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.