Duplex: Mansfield Texas

Property Report : Duplex: Mansfield Texas

Category: Rental Property


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.



1. Buy Duplex

2. Rent both units

3. Hold for 18 months

4. Sell one unit to cover most of your down-payment

5. Keep second unit as a cash-flow rental

Executive Summary

Property Description

NameDuplex: Mansfield Texas
AddressKillian Dr, Mansfield
TypeSingle family
Size2536 SF
Rooms8 rooms : 6 bed. + 4 bath. + 2 kitchens
Purchase Price$ 249,900
Rent$ 2,600/month


Financing Overview

Purchase Price$ 249,900
Down Payment$ 49,980
Mortgage (30yr @ 5.50%)$ 199,920
Loan-to-Value (LTV)80.00 %
Closing Costs$ 3,500
Total Aquisition Cost$ 255,900

Income, Expenses and Cash Flow (Year 1)

Gross Operating Income (GOI)$ 29,640
Total Expenses$ 11,279
Net Operating Income (NOI)$ 18,361
Annual Debt Service$ 13,621
Rehabilitaion$ 0
Cash Flow Before Taxes (CFBT)$ 4,740
Income Tax Liability$ 0
Cash Flow After Taxes (CFAT)$ 4,740

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)$ 116,674
Internal Rate of Return (IRR)13.33 %
Cash on Cash Return8.47 %
Return on Equity (ROE)8.47 %
Capitalization Rate7.35 %
Gross Rent Multiplier (GRM)8.01
Debt-coverage Ratio (DCR)2.29
Operating Expense Ratio (OER)38.05 %

Resale Analysis

Sale Price in year 15 (Appreciation:1%)$ 290,126
Sale Proceeds (Before Tax)$ 130,893
Optimal Holding Period (based on NPV)30 years

Property Description

This a Duplex. 2 units, 2 titles (or one if you want). New homes (2011), from the builder. Smart floor plan. Info is based on 2 units.

Price$ 249,900
AddressKillian Dr, Mansfield, 76063, TX
Year Built2011
Size2536 SF
Number of Bedrooms6
Number of Bathrooms4
Number of Rooms8
Number of Kitchens2

Operation Effectiveness

The Annual Property Operating Data

Incomes% of GOI
Gross Scheduled Rent Income$ 31,200 
Total Gross Income$ 31,200 
Vacancy loss$ 1,560 
Gross Operating Income$ 29,640100.00 %
Repairs$ 1190.40 %
Manager$ 1,5605.26 %
Prop_Taxes$ 6,96023.48 %
HOA$ 1,8006.07 %
Leasing$ 8402.83 %
Total Expenses$ 11,27938.05 %
Net Operating Income$ 18,36161.95 %

Cash Flow (1st year)

Net Operating Income$ 18,36161.95 %
Annual Debt Service$ 13,62145.96 %
Rehabilitation$ 00.00 %
Cash Flow Before Taxes (CFBT)$ 4,74015.99 %
Income Tax Liability$ 00.00 %
Cash Flow After Taxes (CFAT)$ 4,74015.99 %

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 Ratio38.05 %
Break-Even Ratio81.32 %

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$ 116,674
Internal Rate of Return13.33 %
Profitability Index3.08
House P/E Ratio3.05
Annual Depreciation$ 7,270

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 Return8.47 %
Return on Investment12.93 %
Return on Equity8.47 %
Capitalization Rate7.35 %
Gross Rental Yield12.48 %
Gross Rent Multiplier8.01

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$ 249,900
Closing Costs$ 3,500
Loan Costs$ 2,500
Total$ 255,900
Financing% of Acq.
Down Payment + Costs$ 49,98019.53 %
Mortgage$ 199,92078.12 %
Loan to Value Ratio80.00 %
Debt Coverage Ratio2.29
Mortgage Amount$ 199,920
Length30 years
Interest Rate5.50 %
Monthly Payment$ 1,135.12


Long Term Financial Forecast

Operational Analysis
Gross Scheduled Income$ 0$ 31,200$ 32,467$ 34,123$ 35,864
Vacancy Loss$ 0$ 1,560$ 1,623$ 1,706$ 1,793
Gross Operating Income$ 0$ 29,640$ 30,844$ 32,417$ 34,070
Expenses$ 0$ 11,279$ 11,737$ 12,335$ 12,964
Net Operating Income$ 0$ 18,361$ 19,107$ 20,082$ 21,106
Mortgage Payment$ 0$ 13,621$ 13,621$ 13,621$ 13,621
Payment Interest Part$ 0$ 10,928$ 10,267$ 9,208$ 7,815
Payment Principal Part$ 0$ 2,693$ 3,354$ 4,413$ 5,806
Cash Flow
Rehabilitation$ 0$ 0$ 0$ 0$ 0
Cash Flow Before Taxes$ -55,980$ 4,740$ 5,486$ 6,460$ 7,485
Depreciation$ 0$ 7,270$ 7,270$ 7,270$ 7,270
Taxes$ 0$ 0$ 0$ 0$ 0
Cash Flow After Taxes$ -55,980$ 4,740$ 5,486$ 6,460$ 7,485

Resale Analysis

Resale Price Evaluation Methods

The property is sold after 15 years.

Appreciation (1.00%)$ 290,126
Cap Rate (7.35%) & NOI$ 287,156
Gross Rent Multiplier$ 287,254

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$ 290,126
Costs of Sale (7.00%)$ 20,309
Mortgage Balance Payoff$ 138,924
Early Payoff Penalty (0.00 %)$ 0
Sale Proceeds Before Tax$ 130,893

Net Assets and Yield

Net Assets
Sale Proceeds Before Tax$ 130,893
Down Payment$ 49,980
Net Assets$ 80,913
Annual Net Assets$ 5,394
Average Cash Flow (After Taxes)$ 6,083
Average Annual Yield$ 11,477
Average Annual Return4.59 %

Optimal Holding Period based on NPV

Holding Period30 years
Max NPV$ 307,865

Sensitivity Analysis

Loan to Value ratio

Your current LTV ratio is: 80.00%.

80.00 %$ 116,67413.33 %
0%$ -77,2515.44 %
10%$ -65,2115.82 %
20%$ -53,1726.27 %
30%$ -41,1336.82 %
40%$ -29,0947.49 %
50%$ -17,0548.33 %
60%$ -5,0159.42 %
70%$ 7,02410.96 %
80%$ 19,06313.33 %
90%$ 31,10217.77 %

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$ 116,67413.33 %
5$ -51,0415.68 %
10$ -37,3105.69 %
15$ -26,4265.70 %
20$ -2,8519.52 %
25$ 10,61511.83 %
30$ 19,06313.33 %

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.