REI Wise Investment Analysis Software...Capitalization Rate 7.53% Gross Rent Multiplier 8.23 Gross Income / Square Feet $11.14 Gross Expenses / Square Feet ($3.69) Operating Expense

BERKLEY APARTMENTS

712 Grayson Street, Norfolk, VA 23523

Leo Sutton

Director

+1-757-469-1537

[email protected]

0225-197664

Adam Sutton

Commercial Agent

(757) 256-6242

[email protected]

0225-197734

Easy access to DowntownNorfolk; DowntownPortsmouth, I464, and I264.

●

Within walking distance ofMajor Shipyards.

●

Many units have been recentlyRenovated.Tenants pay their own waterand electricity.

●

Newly updated LED ExteriorLighting.

●

Laundry Room on property.●

Table of Contents

Real Estate Investment Details ..................................................................................... 3

Executive Summary ...................................................................................................... 4

Cash Flow Analysis ...................................................................................................... 5

Internal Rate of Return Analysis .................................................................................. 6

Annual Property Operating Data .................................................................................. 7

Annual Property Operating Data per Sq. Ft. .............................................................. 8

Investment Return Analysis .......................................................................................... 10

Property Equity Analysis ............................................................................................ 11

Gross Income Vs. Operating Expenses ...................................................................... 12

Equity vs. Debt ............................................................................................................... 13

Cumulative Wealth Analysis .......................................................................................... 14

Operating Income Analysis ........................................................................................... 15

Real Estate Investment Details

ANALYSIS

Analysis Date July 2015

PROPERTY

Property BERKLEY APARTMENTS

Property Address 712 Grayson StreetNorfolk, VA 23523

Year Built 1988

FINANCIAL INFORMATION

Down Payment $550,000

Federal Tax Rate 15.0%

State Tax Rate 5.75%

PURCHASE INFORMATION

Property Type MultiFamily

Purchase Price $2,200,000

Fair Market Value $2,200,000

Units 30

Total Rentable Sq. Ft. 24,000

Resale Valuation 3.0% (annual appreciation)

Resale Expenses 0.5%

LOANS

Debt Term Amortization Rate Payment LO Costs

Fixed $1,650,000 25 years 25 years 5.0% $9,646 $16,500

INCOME & EXPENSES

Gross Operating Income $254,098

Monthly GOI $21,175

Total Annual Expenses ($88,518)

Monthly Expenses ($7,376)

CONTACT INFORMATION

Leo Sutton

+1-757-469-1537

[email protected]

0225-197664

Adam Sutton

(757) 256-6242

[email protected]

0225-197734

The calculations and data presented are deemed to be accurate, but not guaranteed. They are intended for the purpose of illustrative projectionsand analysis. The information provided is not intended to replace or serve as substitute for any legal, accounting, investment, real estate, tax orother professional advice, consultation or service. The user of this software should consult with a professional in the respective legal, accounting,tax or other professional area before making any decisions.

page 3 of 15

Executive SummaryBERKLEY APARTMENTS

712 Grayson StreetNorfolk, VA 23523

Leo Sutton+1-757-469-1537

ACQUISITION COSTS

Purchase Price, Points and Closing Costs $2,216,500

Investment - Cash $566,500

First Loan $1,650,000

INVESTMENT INFORMATION

Purchase Price $2,200,000

Price per Unit $73,333

Price per Sq. Ft. $91.67

Income per Unit $8,914

Expenses per Unit ($2,951)

INCOME, EXPENSES & CASH FLOW

Gross Scheduled Income $267,408

Total Vacancy and Credits ($13,310)

Operating Expenses ($88,518)

Net Operating Income $165,580

Debt Service ($115,749)

Cash Flow Before Taxes $49,831

Total Interest (Debt Service) ($81,727)

Depreciation and Amortization ($77,308)

Taxable Income (Loss) $6,545

Tax Savings (Costs) ($1,358)

Cash Flow After Taxes $48,473

FINANCIAL INDICATORS

Cash on Cash Return Before Taxes 8.80%

Debt Coverage Ratio 1.43

Capitalization Rate 7.53%

Gross Rent Multiplier 8.23

Gross Income / Square Feet $11.14

Gross Expenses / Square Feet ($3.69)

Operating Expense Ratio 34.84%

page 4 of 15

Cash Flow AnalysisBERKLEY APARTMENTS


Leo Sutton+1-757-469-1537

Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

GROSS SCHEDULED INCOME $267,408 $275,394 $283,620 $292,093 $300,819 $309,808 $319,066 $328,602 $338,424 $348,541

General Vacancy ($13,310) ($13,710) ($14,121) ($14,545) ($14,981) ($15,430) ($15,893) ($16,370) ($16,861) ($17,367)

Total Operating Expenses ($88,518) ($89,863) ($91,237) ($92,642) ($94,077) ($95,545) ($97,045) ($98,578) ($100,146) ($101,750)

NET OPERATING INCOME $165,580 $171,822 $178,262 $184,906 $191,761 $198,833 $206,128 $213,654 $221,417 $229,424

Loan Payment ($115,749) ($115,749) ($115,749) ($115,749) ($115,749) ($115,749) ($115,749) ($115,749) ($115,749) ($115,749)

NET CASH FLOW (b/t) $49,831 $56,073 $62,513 $69,158 $76,012 $83,084 $90,379 $97,905 $105,668 $113,676

Cash On Cash Return b/t 8.80% 9.90% 11.03% 12.21% 13.42% 14.67% 15.95% 17.28% 18.65% 20.07%


Depreciation ($76,648) ($79,992) ($79,992) ($79,992) ($79,992) ($79,992) ($79,992) ($79,992) ($79,992) ($76,648)

Amortization ($660) ($660) ($660) ($660) ($660) ($660) ($660) ($660) ($660) ($660)

Loan Interest ($81,727) ($79,987) ($78,157) ($76,234) ($74,212) ($72,087) ($69,853) ($67,505) ($65,037) ($62,442)

TAXABLE INCOME (LOSS) $6,545 $11,183 $19,453 $28,021 $36,897 $46,094 $55,623 $65,497 $75,728 $89,674

Income Taxes ($1,358) ($2,321) ($4,036) ($5,814) ($7,656) ($9,564) ($11,542) ($13,591) ($15,714) ($18,607)

CASH FLOW (a/t) $48,473 $53,753 $58,477 $63,343 $68,356 $73,520 $78,838 $84,314 $89,954 $95,068

Cash On Cash Return a/t 8.56% 9.49% 10.32% 11.18% 12.07% 12.98% 13.92% 14.88% 15.88% 16.78%

Footnotes: b/t = before taxes;a/t = after taxes

page 5 of 15

Internal Rate of Return AnalysisBERKLEY APARTMENTS


Leo Sutton+1-757-469-1537

BEFORE TAX IRR

Time Future Cash Flows

Initial Investment ($566,500)

End of Year 1 $49,831









End of Year 10* $1,835,755

IRR = 20.2% * ($113,676 + $1,722,079)

AFTER TAX IRR

Time Future Cash Flows

Initial Investment ($566,500)










End of Year 10* $1,700,217

IRR = 18.85% * ($95,068 + $1,605,149)

page 6 of 15

Annual Property Operating DataBERKLEY APARTMENTS


Leo Sutton+1-757-469-1537


Rental Income $266,208 $274,194 $282,420 $290,893 $299,619 $308,608 $317,866 $327,402 $337,224 $347,341

Coin Operated Laundry $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200

GROSS SCHEDULED INCOME $267,408 $275,394 $283,620 $292,093 $300,819 $309,808 $319,066 $328,602 $338,424 $348,541

General Vacancy ($13,310) ($13,710) ($14,121) ($14,545) ($14,981) ($15,430) ($15,893) ($16,370) ($16,861) ($17,367)

GROSS OPERATING INCOME $254,098 $261,685 $269,499 $277,548 $285,838 $294,378 $303,173 $312,232 $321,563 $331,174

Expenses

Property Management Fee ($26,741) ($27,539) ($28,362) ($29,209) ($30,082) ($30,981) ($31,907) ($32,860) ($33,842) ($34,854)

Building Insurance ($10,000) ($10,100) ($10,201) ($10,303) ($10,406) ($10,510) ($10,615) ($10,721) ($10,829) ($10,937)

Lawncare ($6,420) ($6,420) ($6,420) ($6,420) ($6,420) ($6,420) ($6,420) ($6,420) ($6,420) ($6,420)

Maintenance ($21,293) ($21,506) ($21,721) ($21,938) ($22,157) ($22,379) ($22,603) ($22,829) ($23,057) ($23,288)

Pest Control ($720) ($720) ($720) ($720) ($720) ($720) ($720) ($720) ($720) ($720)

Taxes - Real Estate ($17,308) ($17,481) ($17,656) ($17,832) ($18,011) ($18,191) ($18,373) ($18,557) ($18,742) ($18,930)

Trash Removal ($2,520) ($2,545) ($2,571) ($2,596) ($2,622) ($2,649) ($2,675) ($2,702) ($2,729) ($2,756)

Utility - Electricity ($2,100) ($2,121) ($2,142) ($2,164) ($2,185) ($2,207) ($2,229) ($2,251) ($2,274) ($2,297)

Utility - Water/Sewer ($420) ($424) ($428) ($433) ($437) ($441) ($446) ($450) ($455) ($459)

Utility - Storm Water ($996) ($1,006) ($1,016) ($1,026) ($1,036) ($1,047) ($1,057) ($1,068) ($1,079) ($1,089)

TOTAL OPERATING EXPENSES ($88,518) ($89,863) ($91,237) ($92,642) ($94,077) ($95,545) ($97,045) ($98,578) ($100,146) ($101,750)


page 7 of 15

Annual Property Operating Data per Sq. Ft.BERKLEY APARTMENTS


Leo Sutton+1-757-469-1537


Rental Income $11.09 $11.42 $11.77 $12.12 $12.48 $12.86 $13.24 $13.64 $14.05 $14.47

Miscellaneous Income $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05

GROSS SCHEDULED INCOME $11.14 $11.47 $11.82 $12.17 $12.53 $12.91 $13.29 $13.69 $14.10 $14.52

General Vacancy ($0.55) ($0.57) ($0.59) ($0.61) ($0.62) ($0.64) ($0.66) ($0.68) ($0.70) ($0.72)

GROSS OPERATING INCOME $10.59 $10.90 $11.23 $11.56 $11.91 $12.27 $12.63 $13.01 $13.40 $13.80

Expenses

Property Management Fee ($1.11) ($1.15) ($1.18) ($1.22) ($1.25) ($1.29) ($1.33) ($1.37) ($1.41) ($1.45)

Building Insurance ($0.42) ($0.42) ($0.43) ($0.43) ($0.43) ($0.44) ($0.44) ($0.45) ($0.45) ($0.46)

Lawncare ($0.27) ($0.27) ($0.27) ($0.27) ($0.27) ($0.27) ($0.27) ($0.27) ($0.27) ($0.27)

Maintenance ($0.89) ($0.90) ($0.91) ($0.91) ($0.92) ($0.93) ($0.94) ($0.95) ($0.96) ($0.97)

Pest Control ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03)

Taxes - Real Estate ($0.72) ($0.73) ($0.74) ($0.74) ($0.75) ($0.76) ($0.77) ($0.77) ($0.78) ($0.79)

Trash Removal ($0.11) ($0.11) ($0.11) ($0.11) ($0.11) ($0.11) ($0.11) ($0.11) ($0.11) ($0.11)

Utility - Electricity ($0.09) ($0.09) ($0.09) ($0.09) ($0.09) ($0.09) ($0.09) ($0.09) ($0.09) ($0.10)

Utility - Water/Sewer ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02)

Utility - Storm Water ($0.04) ($0.04) ($0.04) ($0.04) ($0.04) ($0.04) ($0.04) ($0.04) ($0.04) ($0.05)

TOTAL OPERATING EXPENSES ($3.69) ($3.74) ($3.80) ($3.86) ($3.92) ($3.98) ($4.04) ($4.11) ($4.17) ($4.24)

page 8 of 15

Annual Property Operating Data per Sq. Ft.BERKLEY APARTMENTS


Leo Sutton+1-757-469-1537


NET OPERATING INCOME $6.90 $7.16 $7.43 $7.70 $7.99 $8.28 $8.59 $8.90 $9.23 $9.56

page 9 of 15

Investment Return AnalysisBERKLEY APARTMENTS


Leo Sutton+1-757-469-1537


Cash Flow - To Date $48,473 $102,226 $160,703 $224,046 $292,402 $365,922 $444,759 $529,074 $619,028 $714,097

Net Resale Proceeds $630,481 $721,747 $816,873 $916,011 $1,019,324 $1,126,980 $1,239,153 $1,356,027 $1,477,792 $1,605,149

Invested Capital ($566,500) ($566,500) ($566,500) ($566,500) ($566,500) ($566,500) ($566,500) ($566,500) ($566,500) ($566,500)

Net Return on Investment $112,454 $257,473 $411,075 $573,557 $745,227 $926,402 $1,117,413 $1,318,601 $1,530,320 $1,752,745

Internal Rate of Return 19.85% 21.36% 21.33% 21.01% 20.61% 20.21% 19.83% 19.48% 19.15% 18.85%

Modified IRR 19.85% 20.60% 19.95% 19.11% 18.28% 17.53% 16.84% 16.22% 15.65% 15.14%

NPV (cash flow + reversion) $122,023 $281,498 $451,272 $631,704 $823,165 $1,026,041 $1,240,729 $1,467,644 $1,707,212 $1,959,879

PV (NOI + reversion) $2,420,250 $2,659,712 $2,907,643 $3,164,309 $3,429,983 $3,704,945 $3,989,487 $4,283,907 $4,588,512 $4,903,621

Footnotes: a/t = after taxes; Modified IRR = Modified Internal Rate of Return; PV = Present Value; NPV = Net Present Value; NOI = Net Operating IncomeReversion = Amount received from the resale; Net Return on Investment = Cash Flow (a/t To Date) + Net Proceeds from Resale - Invested Capital.

page 10 of 15

Property Equity AnalysisBERKLEY APARTMENTS


Leo Sutton+1-757-469-1537

Year 1 2 3 4 5 6 7 8 9 10

$180,000

$360,000

$540,000

$720,000

$900,000

$1,080,000

$1,260,000

$1,440,000

$1,620,000

$1,800,000

Legend

Initial Equity Equity (loan reduction) Equity (appreciation)

page 11 of 15

Gross Income Vs. Operating ExpensesBERKLEY APARTMENTS


Leo Sutton+1-757-469-1537

Year 1 2 3 4 5 6 7 8 9 10

$35,000

$70,000

$105,000

$140,000

$175,000

$210,000

$245,000

$280,000

$315,000

$350,000

Legend

GROSS SCHEDULED INCOME Total Operating Expenses

page 12 of 15

Equity vs. DebtBERKLEY APARTMENTS


Leo Sutton+1-757-469-1537

Year 1 2 3 4 5 6 7 8 9 10

$180,000

$360,000

$540,000

$720,000

$900,000

$1,080,000

$1,260,000

$1,440,000

$1,620,000

$1,800,000

Legend

Equity Loan Principal Balance

page 13 of 15

Cumulative Wealth AnalysisBERKLEY APARTMENTS


Leo Sutton+1-757-469-1537

Year 1 2 3 4 5 6 7 8 9 10

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

$2,000,000

Legend

Equity (loan reduction) Equity (appreciation) CASH FLOW (a/t)

page 14 of 15

Operating Income AnalysisBERKLEY APARTMENTS


Leo Sutton+1-757-469-1537

Year 1 2 3 4 5 6 7 8 9 10

$34,000

$68,000

$102,000

$136,000

$170,000

$204,000

$238,000

$272,000

$306,000

$340,000

Legend

GROSS OPERATING INCOME NET OPERATING INCOME NET CASH FLOW (b/t)

page 15 of 15

Documents

REI Wise Investment Analysis Software...Capitalization Rate 7.53% Gross Rent Multiplier 8.23 Gross Income / Square Feet $11.14 Gross Expenses / Square Feet ($3.69) Operating Expense