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A B C D E F G H I J K L MAnalysts Name: Matthew Lazarus
Project Name: 1536 NW 3rd Ave Date: 4/18/2016
PERFORMANCE SUMMARY
Holding Period 1 2 3 4 5 6 7 8 9 10
1 NPV (80,541) (55,583) (35,223) (18,742) (5,528) 4,942 13,115 19,372 24,036 27,382
2 IRR -24.84% -0.27% 8.39% 12.33% 14.36% 15.48% 16.10% 16.45% 16.63% 16.71%
ASSUMPTIONS
PROPERTY CHARACTERISTICS
1 Purchase Price ($) 775,000$
2 Selling Costs (%) 10%
3 Potential Gross Income ($)
Unit Type
2BR/1Bath 680$ 16$ 10,880$
Efficiency -$ -$ -$
Inefficiency -$ -$ -$
Broom Closet -$ -$ -$
Monthly Potential Gross Income 10,880$
Other Income ($) -$
4 Operating Expenses (first year)
Expenses Tied to EGI
Management: Percent of EGI 7%
Other Expenses: Percent of EGI 38%
Total Operating Expenses Tied to EGI 55,814
Itemized Expenses
Real Estate Taxes -$
Insurance -$
Utilities -$
Garbage Collection -$
Supplies -$
Repairs -$
Reserves/"Above-line" CAP-X 5,500$
Maintenance -$
Management -$
Hot water heater replacement -$
Air Conditioner Replacement -$
Other -$
Total Itemized Operating Expenses 5,500$
Total Operating Expenses 61,314$
5 Capital Expenditures ("Below-line" CapX) -$
Year: 1 2 3 4 5 6 7 8 9 10 11
6 Rental Income Growth Rate (%) 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%
7 Other Income Growth Rate (%) 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
8 Vacancy/Collection Loss (%) 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
10 Growth Rate of Itemized Operating Expenses 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%
12 Growth Rate of CapX 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%
11 Terminal ("Going Out") Cap Rate 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5% 8.5%
FINANCING TERMS
1 Loan Amount 542,500$
2 Annual Interest Rate 5.5%
3 Loan Term for Amortization 20
4 Loan Maturity 11
5 Number of Payments/Year 12
6 Loan Fee 0%
7 Prepayment Penalty
Investor Information
1 Required Yield 15%
ANALYST'S NAME Matthew Lazarus
PROJECT NAME 1536 NW 3rd Ave DATE 4/18/2016
Operating Statement
Year: 1 2 3 4 5 6 7 8 9 10 11
1 Potential Gross Income 130,560$ 134,477$ 138,511$ 142,666$ 146,946$ 151,355$ 155,895$ 160,572$ 165,390$ 170,351$ 175,462$
2 less: Vacancy/Collection (6,528)$ (6,724)$ (6,926)$ (7,133)$ (7,347)$ (7,568)$ (7,795)$ (8,029)$ (8,269)$ (8,518)$ (8,773)$
PRO-FORMA OPERATING STATEMENTS AND REVERSION ESTIMATES
78798081828384858687888990919293949596979899100101102103104105106107108109110111
112113114115116117118119120121122123124125126127128129130131132133134
A B C D E F G H I J K L M3 plus: Other Income -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
4 Effective Gross Income 124,032$ 127,753$ 131,586$ 135,533$ 139,599$ 143,787$ 148,101$ 152,544$ 157,120$ 161,834$ 166,689$
5 less: Operating Expenses (61,314)$ (63,154)$ (65,048)$ (67,000)$ (69,010)$ (71,080)$ (73,213)$ (75,409)$ (77,671)$ (80,001)$ (82,401)$
6 NET OPERATING INCOME 62,718$ 64,599$ 66,537$ 68,533$ 70,589$ 72,707$ 74,888$ 77,135$ 79,449$ 81,832$ 84,287$
7 less: Capital Expenditures (CapX) -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
8 CASH FLOW BEFORE D.S. AND TAXES 62,718$ 64,599$ 66,537$ 68,533$ 70,589$ 72,707$ 74,888$ 77,135$ 79,449$ 81,832$ 84,287$
9 less: Debt Service (44,781)$ (44,781)$ (44,781)$ (44,781)$ (44,781)$ (44,781)$ (44,781)$ (44,781)$ (44,781)$ (44,781)$ (44,781)$
10 less: Debt Reduction -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
11 BEFORE TAX CASH FLOW 17,936$ 19,818$ 21,756$ 23,752$ 25,808$ 27,925$ 30,107$ 32,353$ 34,667$ 37,051$ 39,506$
-----------------
REVERSION
1 Estimated Selling Price 759,990$ 782,789$ 806,273$ 830,461$ 855,375$ 881,036$ 907,467$ 934,692$ 962,732$ 991,614$
2 less: Selling Costs (75,999)$ (78,279)$ (80,627)$ (83,046)$ (85,538)$ (88,104)$ (90,747)$ (93,469)$ (96,273)$ (99,161)$
3 Net Sales Proceeds 683,991$ 704,510$ 725,646$ 747,415$ 769,838$ 792,933$ 816,721$ 841,222$ 866,459$ 892,453$
4 less: Mortgage Balance (527,174)$ (510,982)$ (493,878)$ (475,809)$ (456,721)$ (436,556)$ (415,253)$ (392,749)$ (368,975)$ (343,860)$
5 Prepayment Penalty -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
6 BTCF FROM REVERSION 156,817$ 193,528$ 231,768$ 271,606$ 313,117$ 356,377$ 401,468$ 448,474$ 497,484$ 548,592$
---------------------
Year 1 2 3 4 5 6 7 8 9 10
INVESTMENT YIELD AND VALUE
1 Initial Equity 232,500$
2 NPV ($80,541) (55,583) (35,223) (18,742) (5,528) 4,942 13,115 19,372 24,036 27,382
3 IRR -25% 0% 8.4% 12.3% 14.4% 15.5% 16.1% 16.5% 16.6% 16.7%
------------------
FINANCIAL RATIOS
4 Loan/Original Value (end of year) 68% 66% 64% 61% 59% 56% 54% 51% 48% 44%
5 Loan/Current Value (end of year) 69% 65% 61% 57% 53% 50% 46% 42% 38% 35%
6 Debt Service Coverage 1.40 1.44 1.49 1.53 1.58 1.62 1.67 1.72 1.77 1.83
7 Operating Expense Ratio 49% 49% 49% 49% 49% 49% 49% 49% 49% 49%
8 Break-even Occupancy Level 81% 80% 79% 78% 77% 77% 76% 75% 74% 73%
------------------
RATES OF RETURN:
9 BTR on Original Equity (EDR) 7.7%
10 Overall Rate of Return (OAR) 8.1%
-------------------
TOTAL BEFORE TAX CASH FLOWS
0 1 2 3 4 5 6 7 8 9 10
(232,500)$ 174,753$
(232,500)$ 17,936$ 213,346$
(232,500)$ 17,936$ 19,818$ 253,523$
(232,500)$ 17,936$ 19,818$ 21,756$ 295,358$
(232,500)$ 17,936$ 19,818$ 21,756$ 23,752$ 338,925$
(232,500)$ 17,936$ 19,818$ 21,756$ 23,752$ 25,808$ 384,303$
(232,500)$ 17,936$ 19,818$ 21,756$ 23,752$ 25,808$ 27,925$ 431,574$
(232,500)$ 17,936$ 19,818$ 21,756$ 23,752$ 25,808$ 27,925$ 30,107$ 480,827$
(232,500)$ 17,936$ 19,818$ 21,756$ 23,752$ 25,808$ 27,925$ 30,107$ 32,353$ 532,151$
(232,500)$ 17,936$ 19,818$ 21,756$ 23,752$ 25,808$ 27,925$ 30,107$ 32,353$ 34,667$ 585,643$
INVESTMENT PERFORMANCE AND ANALYSIS
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