How to Motivate Clients to Make Decisions

Investment Analysis Toolsto Guide Investment Decisions

Steven R. Price, CCIM Price Properties, Inc. Colorado

Springs, Colorado

10:30 – 11:45

Disclaimer

• The screenshots contained herein include– CCIM Excel® templates

• 5-Year Analysis Workbook• DCF Analysis Workbook v9.5• Lease vs. Purchase Workbook

– STDB hosted software available to CCIM members– Commercially available packaged software

Neither the CCIM Institute or the Presenter are selling or endorsing the commercially available software shown. It is being presented solely for illustration purposes to

reflect differences between CCIM-owned and CCIM-endorsed products.

Objectives

• Evaluate various investment analysis tools• Use digital tools to enhance your presentation,

not dominate it• Blend all skills and tools to:

– Improve Listing Decisions– Improve Investment Decisions– Improve Presentations– Close more transactions

What’s in your tool belt?

Forecasting

IRR

NPVCapital

Accumulation

NegotiatingPresenting

Calculator

Computer SoftwareSite Analysis

Supply & Demand

Tablet

Financial Analysis

Taxation

User Decisions

Investor Decisions

Investor Benchmarks

GIS

Financing

Partnerships

Cash-on-Cash

GRM

GRM

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=V6YIsVDLTmRAuM&tbnid=hh4TGCCu6yFfiM:&ved=0CAUQjRw&url=http://bigupticksocial.com/gear-up-your-online-gravitas-tool-belt-you-have-one-dont-you/&ei=3FtpUsqCLKa6yQHIyIDoDg&bvm=bv.55123115,d.aWc&psig=AFQjCNFaXhTpyWb9mrZoPbI9aeOkUTQDkw&ust=1382722845582187

Computer don’t sell real estate.People do.

People don’t trust computers.Trust is the key to selling anything.

Steve’s 1st Rule

Are they really interested or just

shopping?

Will they understand the terminology?

How do I get them to like me and trust me?

How do I get them to make a

decision?

Should I dig into the details or

keep it simple?

How much time will I need to

make my point?

Will they understand the

lingo?

What can I do to make this more

interesting?


shopping?




decision?


keep it simple?


make my point?


lingo?


interesting?

Needs ________________________

Urgency ________________________

Motivation ________________________

Expectations ________________________

Resources ________________________

Authority ________________________

Loyalty ________________________

Qualifying


shopping?




decision?


keep it simple?


make my point?


lingo?


interesting?

If you don’t give trust to others, it’s because they

haven’t earned it. If you don’t get trust from others, it’s because YOU

haven’t earned it.Gitomer

Little Teal Book of Trust, Jeffrey Gitomer

All things being equal, people want to do business

with their friends. All things being not quite so equal, people still want to

do business with their friends.

Gitomer

Little Teal Book of Trust, Jeffrey Gitomer


shopping?




decision?


keep it simple?


make my point?


lingo?


interesting?

Center for Creative Learning

SAVI Learning Styles

• Somatic Learning by Doing• Auditory Learning by Listening• Visual Learning by

Observing• Intellectual Learning by

Analyzing

The Accelerated Learning Handbook, Dave Meier

Steve’s SAVI Scores

• Meier conducted an 80 question survey where attendees answered questions about how they perceive they learn best, what captures the interest and attention, etc.

S A V I

24 18 13 25

The Accelerated Learning Handbook, Dave Meier-

Somatic

(Doing)

Visual

(Observing)

Auditory/Affective

(Feeling)

Intellectual

(Analyzing)

37% 16%

24% 23%

Steve’s SAVI Scale

The Accelerated Learning Handbook, Dave Meier

Type 1Type 4

Type 2Type 3

4 8 12 16 20 24 28 3232 28 24 20 16 12 8 4

4

8

12

1

6

20

24

2

8

32

32

28

24

20

16

12

8

4

SOMATIC VISUAL

AUDITORY

INTELLECTUAL

Use Visual Aids

There are twenty-two times the number of nerves from the eye to the brain as from the ear to the brain.

The Psychology of Selling, Brian Tracy


shopping?




decision?


keep it simple?


make my point?


lingo?


interesting?

LIMBIC SYSTEM

REPTILIAN BRAIN

MOTOR & SENSORY CORTEX

NEOCORTEX

•Survival

•Balance

•Autonomic Systems

•Think

•Reason

•Plan

•Solve

•Learn

•Create

•Verbal•Excitement

•Emotion

•Long Term Memory

•Instincts

• Feeding

• Fighting

• Fleeing

•Body Movement

•Talking

TRIUNE BRAIN

Buyer Types

1. Apathetic Buyer (about 5%)

– Will never buy anything, no matter how good

2. Self-Actualizing Buyer (about 5%)

– Knows exactly what s/he wants and $$$

3. Analytical Buyer (about25%)

– Self-contained and task oriented; slow and specific

4. Relationship Buyer (about25%)

– Concerned about people and their opinions

5. Driver Buyer (about 25% depending on what you sell)

– Direct, impatient, straight to the point; deal maker

6. Socializer Buyer (about25%)

– Outgoing, extroverted, achievement & results oriented



shopping?




decision?


keep it simple?


make my point?


lingo?


interesting?

Time Management

The average attention span of an adult is about three sentences.



shopping?




decision?


keep it simple?


make my point?


lingo?


interesting?

CI-104 Case Study

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Potential Rental Income $1,345,000 $1,345,000 $1,345,000 $1,345,000 $1,345,000 $1,345,000+ Potential Pass-thrus $553,000 $566,825 $581,009 $595,563 $610,496 $625,818= Total Potential Income $1,898,000 $1,911,825 $1,926,009 $1,940,563 $1,955,496 $1,970,818- Vacancy & Credit Losses @0% $0 $0 $0 $0 $0 $0= Gross Operating Income $1,898,000 $1,911,825 $1,926,009 $1,940,563 $1,955,496 $1,970,818- Taxes $158,000 $161,160 $164,383 $167,671 $171,024 $174,445- Insurance $118,500 $120,870 $123,287 $125,753 $128,268 $130,834- CAM $276,500 $284,795 $293,339 $302,139 $311,203 $320,539= Net Operating Income $1,345,000 $1,345,000 $1,345,000 $1,345,000 $1,345,000 $1,345,000

Potential Rental Income $372,000 $384,360 $397,139 $410,351 $424,011 $438,135+ Potential Pass-thrus $168,000 $172,200 $176,509 $180,931 $185,467 $190,122= Total Potential Income $540,000 $556,560 $573,648 $591,281 $609,478 $628,257- Vacancy & Credit Losses @7% $37,800 $38,959 $40,155 $41,390 $42,663 $43,978= Gross Operating Income $502,200 $517,601 $533,493 $549,892 $566,815 $584,279- Taxes $48,000 $48,960 $49,939 $50,938 $51,957 $52,996- Insurance $36,000 $36,720 $37,454 $38,203 $38,968 $39,747- CAM $84,000 $86,520 $89,116 $91,789 $94,543 $97,379= Net Operating Income $334,200 $345,401 $356,983 $368,961 $381,348 $394,157

$1,679,200 $1,690,401 $1,701,983 $1,713,961 $1,726,348 $1,739,157TOTAL NET OPERATING INCOME

NATIONAL CREDIT TENANTS

LOCAL CREDIT TENANTS

Hidden Lakes Retail

Property Name Annual Property Operating DataLocation

Type of Property

Size of Property

Purpose of analysis

Assessed/Appraised Values

Land 20 20%Improvements 80 80% Amort LoanPersonal Property 0 0% Balance Periodic Pmt Pmts/Yr Interest Period TermTotal 100 100% 1st $13,300,000 ####### 12 7.5% 20 10

2nd 12Adjusted Basis as of: 23-Oct-13

$/SQ FT %

ALL FIGURES ARE ANNUAL or $/Unit of GOI COMMENTS/FOOTNOTES1 POTENTIAL RENTAL INCOME 1,679,2002 Less: Vacancy & Cr. Losses of PRI )3 EFFECTIVE RENTAL INCOME 1,679,2004 Plus: Other Income (collectable)

5 GROSS OPERATING INCOME 1,679,200 OPERATING EXPENSES:

789

1011121314

15161718192021222324252627282930 1,679,20031 1,285,72732333435 $393,473

HIDDEN LAKES RETAIL

COMMERCIAL103,000 (Sq. Ft./Units)

FROM CASH FLOW FORECAST

Real Estate Taxes

Personal Property Taxes

Property Insurance

Licenses/Permits

Accounting and Legal

Off Site Management

Payroll

Expenses/Benefits

CI-104, CASE 3

Taxes/Worker's Compensation

Repairs and Maintenance

Utilities:

Less: Funded Reserves

CASH FLOW BEFORE TAXES

NET OPERATING INCOME

266,000

19,000,000200,000

13,300,0006,166,000

$19,200,000

Less: Annual Debt Service

Advertising Supplies

Miscellaneous Contract Services:

Less: Leasing Commissions

Less: Participation Payments

TOTAL OPERATING EXPENSES

Purchase PricePlus Acquisiition CostsPlus Loan Fees/CostsLess MortgagesEquals Initial Investment

Gross Rent Multiplier

Capitalization Rate

Cash on Cash

Cash Flow Analysis Worksheet

Property NamePrepared ForPrepared By

Date Prepared

Mortgage Data Cost Recovery Data1st Mortgage 2nd Mortgage Improvements Personal Property

Amount 13,300,000 Value 15,360,000Interest Rate 7.50% C. R. Method SLAmortization Period 20. Years Useful Life 39Loan Term 10. Years In Service Date 1-Jan-02Payments/Year 12 12 Date of Sale December-06Periodic Payment 107,143.89 - Recapture

Annual Debt Service 1,285,726.74 - Investment Tax Loan Fees/Costs 266,000 Credit ($$ or %)

Taxable IncomeEnd of Year : 1 2 3 4 5

1 1,679,200 1,690,401 1,701,983 1,713,961 1,726,3482

3 =Effective Rental Income 1,679,200 1,690,401 1,701,983 1,713,961 1,726,3484

5 1,679,200 1,690,401 1,701,983 1,713,961 1,726,3486

7 1,679,200 1,690,401 1,701,983 1,713,961 1,726,3488 987,383 964,222 939,262 912,365 883,3809

10

11 377,395 393,830 393,830 393,830 377,39512

13 26,600 26,600 26,600 26,600 26,60014

15 287,822 305,749 342,291 381,166 438,97316 100,738 107,012 119,802 133,408 153,640

Cash Flow17 1,679,200 1,690,401 1,701,983 1,713,961 1,726,34818 1,285,727 1,285,727 1,285,727 1,285,727 1,285,72719

20

21

22 393,473 404,674 416,256 428,234 440,62123 100,738 107,012 119,802 133,408 153,64024 $292,736 $297,662 $296,455 $294,826 $286,981

=NET OPERATING INCOME

19,000,000200,000266,000

13,300,0006,166,000

-Participation Payments

-Amortization of Loan Fees/Costs

-Leasing Commissions

=Real Estate Taxable Income

Tax Liability (Savings) at 35.0%

Potential Rental Income

-Vacancy & Credit Losses

+Other Income (collectable)

=Gross Operating Income

-Operating Expenses

-Participatipation Payments


=CASH FLOW BEFORE TAXES

-Tax Liability (Savings) (Line 16)

=CASH FLOW AFTER TAXES

-Funded Reserves

23-Oct-13

HIDDEN LAKES RETAILCI-104, CASE 3

NET OPERATING INCOME (Line 7)

-Annual Debt Service

-Interest - 1st Mortgage

-Interest - 2nd Mortgage

-Cost Recovery - Improvements-Cost Recovery - Personal Property


Debt Service Coverage

Ratio

Mid-Month Convention

Cost Recovery

Alternative Cash Sales Worksheet

Mortgage BalancesEnd of Year: 1 2 3 4 5

Principal Balance - 1st Mortgage 13,001,656 12,680,151 12,333,687 11,960,325 11,557,979Principal Balance - 2nd Mortgage

TOTAL UNPAID BALANCE $13,001,656 $12,680,151 $12,333,687 $11,960,325 $11,557,979

Calculation of Sale Proceeds

PROJECTED SALES PRICE $19,324,000 $19,324,000 $19,324,000

(At 9.% cap) (At 9.% cap) (At 9.% cap)

CALCULATION OF ADJUSTED BASIS:

1 Basis at Acquisition $19,200,000 $19,200,000 $19,200,0002 +Capital Additions Toggle the explanatory highlights and

3 -Cost Recovery (Depreciation) Taken 1,936,280 1,936,280 1,936,2804 -Basis in Partial Sales (Suggest turn off before printing)

5 =Adjusted Basis at Sale 17,263,720 17,263,720 17,263,720

CALCULATION OF CAPITAL GAIN ON SALE:

6 Sale Price 19,324,000 19,324,000 19,324,0007 -Costs of Sale 386,480 386,480 386,4808 -Adjusted Basis at Sale (Line 5) 17,263,720 17,263,720 17,263,7209 -Participation Payment on Sale

10 =Gain or (Loss) 1,673,800 1,673,800 1,673,80011 -Straight Line Cost Recovery (limited to gain) 1,673,800 1,673,800 1,673,80012 -Suspended Losses

13 =Capital Gain from Appreciation

ITEMS TAXED AS ORDINARY INCOME:

14 Unamortized Loan Fees/Costs (negative) (133,000) (133,000) (133,000)15 +

16 =Ordinary Taxable Income (133,000) (133,000) (133,000)

CALCULATION OF SALES PROCEEDS AFTER TAX:

17 Sale Price 19,324,000 19,324,000 19,324,00018 -Cost of Sale 386,480 386,480 386,48019 +Balance of Funded Reserves

20 -Mortgage Balance(s) 11,557,979 11,557,979 11,557,97921 -Participation Payments on Sale

22 =Sale Proceeds Before Tax 7,379,541 7,379,541 7,379,54123 -Tax (Savings): Ordinary Income at 35% of line 16 (46,550) (46,550) (46,550)24 -Tax: Straight Line Recapture at 25% of line 11 418,450 418,450 418,45025 -Tax on Capital Gains at 15% of line 13

26 =SALE PROCEEDS AFTER TAX $7,007,641 $7,007,641 $7,007,641

Adjusted Basis

Unamortized Loan Fees

Tax on Straight Line

Recapture

Cash Flow Analysis Worksheet

Property NamePrepared ForPrepared By

Date Prepared

Mortgage Data Cost Recovery Data1st Mortgage 2nd Mortgage Improvements Personal Property

Amount 13,300,000 Value 15,360,000Interest Rate 7.50% C. R. Method SLAmortization Period 20. Years Useful Life 39Loan Term 10. Years In Service Date 1-Jan-02Payments/Year 12 12 Date of Sale December-06Periodic Payment 107,143.89 - Recapture

Annual Debt Service 1,285,726.74 - Investment Tax Loan Fees/Costs 266,000 Credit ($$ or %)


1 1,679,200 1,690,401 1,701,983 1,713,961 1,726,3482


5 1,679,200 1,690,401 1,701,983 1,713,961 1,726,3486

7 1,679,200 1,690,401 1,701,983 1,713,961 1,726,348=NET OPERATING INCOME

19,000,000200,000266,000

13,300,0006,166,000





-Operating Expenses

23-Oct-13

HIDDEN LAKES RETAILCI-104, CASE 3



1 1,679,200 1,690,401 1,701,983 1,713,961 1,726,3482


5 1,679,200 1,690,401 1,701,983 1,713,961 1,726,3486

7 1,679,200 1,690,401 1,701,983 1,713,961 1,726,3488 987,383 964,222 939,262 912,365 883,3809

10

11 377,395 393,830 393,830 393,830 377,39512

13 26,600 26,600 26,600 26,600 26,60014

15 287,822 305,749 342,291 381,166 438,97316 100,738 107,012 119,802 133,408 153,640

Cash Flow17 1,679,200 1,690,401 1,701,983 1,713,961 1,726,34818 1,285,727 1,285,727 1,285,727 1,285,727 1,285,72719

20

21

22 393,473 404,674 416,256 428,234 440,62123 100,738 107,012 119,802 133,408 153,64024 $292,736 $297,662 $296,455 $294,826 $286,981

=NET OPERATING INCOME

-Participation Payments

-Amortization of Loan Fees/Costs


=Real Estate Taxable Income

Tax Liability (Savings) at 35.0%





-Operating Expenses

-Participatipation Payments


=CASH FLOW BEFORE TAXES

-Tax Liability (Savings) (Line 16)

=CASH FLOW AFTER TAXES

-Funded Reserves



-Interest - 1st Mortgage

-Interest - 2nd Mortgage

-Cost Recovery - Improvements-Cost Recovery - Personal Property

Alternative Cash Sales Worksheet

Mortgage BalancesEnd of Year: 1 2 3 4 5

Principal Balance - 1st Mortgage 13,001,656 12,680,151 12,333,687 11,960,325 11,557,979Principal Balance - 2nd Mortgage

TOTAL UNPAID BALANCE $13,001,656 $12,680,151 $12,333,687 $11,960,325 $11,557,979

Calculation of Sale Proceeds

PROJECTED SALES PRICE $19,324,000 $19,324,000 $19,324,000

(At 9.% cap) (At 9.% cap) (At 9.% cap)

















ITEMS TAXED AS ORDINARY INCOME:

14 Unamortized Loan Fees/Costs (negative) (133,000) (133,000) (133,000)15 +

16 =Ordinary Taxable Income (133,000) (133,000) (133,000)

CALCULATION OF SALES PROCEEDS AFTER TAX:

17 Sale Price 19,324,000 19,324,000 19,324,00018 -Cost of Sale 386,480 386,480 386,48019 +Balance of Funded Reserves

20 -Mortgage Balance(s) 11,557,979 11,557,979 11,557,97921 -Participation Payments on Sale

22 =Sale Proceeds Before Tax 7,379,541 7,379,541 7,379,54123 -Tax (Savings): Ordinary Income at 35% of line 16 (46,550) (46,550) (46,550)24 -Tax: Straight Line Recapture at 25% of line 11 418,450 418,450 418,45025 -Tax on Capital Gains at 15% of line 13

26 =SALE PROCEEDS AFTER TAX $7,007,641 $7,007,641 $7,007,641

N BEFORE TAX IR Alternative 1 Alternative 2 Alternative 3

NU n $ n $ n $ T

T 0 (6,166,000) 0 (6,166,000) 0 (6,166,000) EE 1 393,473 1 393,473 1 393,473 R

R 2 404,674 2 404,674 2 404,674 N

3 416,256 3 416,256 3 416,256 AF 4 428,234 4 428,234 4 428,234 L

O 5 440,621 + 7,379,541 5 440,621 + 7,379,541 5 440,621 + 7,379,541IRR= 9.95% IRR= 9.95% IRR= 9.95% R

NPV= $0 NPV= $0 NPV= $0

AS @ 9.95% @ 9.95% @ 9.95% T

E ET AFTER TAX S

A Alternative 1 Alternative 2 Alternative 3

R n $ n $ n $ O

0 (6,166,000) 0 (6,166,000) 0 (6,166,000) FL 1 292,736 1 292,736 1 292,736

A 2 297,662 2 297,662 2 297,662 RN 3 296,455 3 296,455 3 296,455 E

R 4 294,826 4 294,826 4 294,826 TE 5 286,981 + 7,007,641 5 286,981 + 7,007,641 5 286,981 + 7,007,641 U

T IRR= 7.13% IRR= 7.13% IRR= 7.13% RN NPV= $0 NPV= $0 NPV= $0

NI @ 7.13% @ 7.13% @ 7.13%

Cap rate used on Sale = 9.% Cap rate on Sale = 9.% Cap rate on Sale = 9.%

IRR & NPV

n $0 (6,166,000)1 292,7362 297,6623 296,4554 294,8265 286,981 + 7,007,641IRR= 7.13%NPV= ($700,388)

@ 10.%

How much should I pay?

Impressed?


shopping?




decision?


keep it simple?


make my point?


lingo?


interesting?

1st Mortgage 2nd Mortgage Improvements Personal Property

$13,300,000 Value $15,360,000

7.50% C. R. Method SL SL

20 Useful Life 39.0

10 In Service Date 1-Jan 1-Jan

12 Date of Sale 31-Dec 31-Dec

$107,143.89 12 Months % age 2.564%

$1,285,727 11.5 Months % age 2.457%

$266,000

1 2 3 4 5 6

1 $1,679,200 $1,690,401 $1,701,983 $1,713,961 $1,726,348 $1,739,157

2

3 $1,679,200 $1,690,401 $1,701,983 $1,713,961 $1,726,348 $1,739,157

4

5 $1,679,200 $1,690,401 $1,701,983 $1,713,961 $1,726,348 $1,739,157

6

7 $1,679,200 $1,690,401 $1,701,983 $1,713,961 $1,726,348 $1,739,157

8 $987,382 $964,222 $939,262 $912,365 $883,380

9

10 $377,395 $393,830 $393,830 $393,830 $377,395

11

12 $26,600 $26,600 $26,600 $26,600 $26,600

13

14

15 $287,823 $305,749 $342,291 $381,166 $438,973

16 $100,738 $107,012 $119,802 $133,408 $153,640

17 $1,679,200 $1,690,401 $1,701,983 $1,713,961 $1,726,348

18 $1,285,727 $1,285,727 $1,285,727 $1,285,727 $1,285,727

19

20

21

22 $393,473 $404,674 $416,256 $428,234 $440,621

23 $100,738 $107,012 $119,802 $133,408 $153,640

24 $292,735 $297,662 $296,455 $294,826 $286,981

Payments/Year

Periodic Payment

$6,166,000Equals Initial InvestmentPurpose of Analysis

October 24, 2013

MORTGAGE DATA

Prepared by

Cash Flow Analysis WorksheetProperty Name

Location

Type of Property

HIDDEN KAKES RETAIL

Size of Property (sf/units) Minus Mortgages103,000


NET OPERATING INCOME

-Interest-First Mortgage

$19,000,000

$200,000

$266,000

$13,300,000

Plus Acquisition Costs

Acquisition Price

Plus Loan Costs

-Tax Liability (Savings) (Line 16 )

CASH FLOW AFTER TAXES


CASH FLOW

-

-Interest-Second Mortgage

TAXABLE INCOME

Amortization Period

Loan Term

End of Year

POTENTIAL RENTAL INCOME


EFFECTIVE RENTAL INCOME

BASIS DATA

Acquisition Price

COST RECOVERY DATA


GROSS OPERATING INCOME

Amount

-

-

-

TOTAL OPERATING EXPENSES

REAL ESTATE TAXABLE INCOME

Tax Liability (Savings) at 35%

-Cost Recovery-Personal Property

-Loan Costs Amortization

-Cost Recovery-Improvements

Acquisition Costs

Total Acquisition Basis

CASH FLOW BEFORE TAXES

Interest Rate

Date Prepared

Annual Debt Service

Loan Fees/Costs

-

Note: Do not enter any information on this sheet.All values are derived f rom the Input Sheet.

CCIM InstituteEquipping the world’s best minds in commercial real estate

1 End of Year: 1 2 3 4 5 6

2 Principal Balance - 1st Mortgage $13,001,656 $12,680,150 $12,333,686 $11,960,325 $11,557,979

3 Principal Balance - 2nd Mortgage

4 TOTAL UNPAID BALANCE $13,001,656 $12,680,150 $12,333,686 $11,960,325 $11,557,979

5 END OF YEAR 1 2 3 4 5 6

6 PROJECTED SALES PRICE (Rounded to nearest 000) $19,324,000

7 Basis at Acquisition $19,200,000

8 +Capital Additions

9 -Cost Recovery (Depreciation) Taken $1,936,280

10 -Basis in Partial Sales

11 =Adjusted Basis at Sale $17,263,720

12 Sale Price $19,324,000

13 -Costs of Sale $386,480

14 -Adjusted Basis at Sale (Line 11) $17,263,720

15 -

16 =Gain or (Loss) $1,673,800

17 -Straight Line Cost Recovery (limited to gain) (Line 9) $1,673,800

18 -Suspended Losses


20 Unamortized Loan Fees/Costs (negative) ($133,000)

21 +

22 =Ordinary Taxable Income ($133,000)

23 Sale Price $19,324,000

24 Cost of Sale $386,480

25 -Participation Payments on Sale

26 -Mortgage Balance(s) $11,557,979

27 +Balance of Funded Reserves

28 =SALE PROCEEDS BEFORE TAX $7,379,541

29 -Tax (Savings)on Ordinary Income (Line 22 x 35%) ($46,550)

30 -Tax on Cost Recovery Recapture (Line 17 x 25%) $418,450

31 -Tax on Capital Gain (Line 19 x 15%)

32 =SALE PROCEEDS AFTER TAX $7,007,641

CALCULATION OF CAPITAL GAIN ON SALE

ITEMS TAXED AS ORDINARY INCOME

CALCULATION OF SALE PROCEEDS

Cash Sale WorksheetMORTGAGE BALANCES

CALCULATION OF SALE PROCEEDS

CALCULATION OF ADJUSTED BASIS

Note: Do not enter any information on this sheet.All values are derived f rom the Input Sheet.

CCIM InstituteEquipping the world’s best minds in commercial real estate

EOY $ EOY $0 ($6,166,000) 0 ($6,166,000)1 $393,473 1 $292,735 2 $404,674 2 $297,662 3 $416,256 3 $296,455 4 $428,234 4 $294,826 5 $440,621 + $7,379,541 5 $286,981 + $7,007,641

IRR = 9.95% IRR = 7.13%

NPV @ = NPV @ 10.00% = ($700,388)

1 2 3 4 5 6$19,127,000 $19,258,000 $19,393,000 $19,533,000 $19,678,000$13,001,656 $12,680,151 $12,333,687 $11,960,326 $11,557,979

67.98% 65.84% 63.60% 61.23% 58.74%1.31 1.31 1.32 1.33 1.34

8.84% 8.90% 8.96% 9.02% 9.09%6.38% 6.56% 6.75% 6.95% 7.15%4.75% 4.83% 4.81% 4.78% 4.65%

8.84%11.31

28.29%

Before Tax Cash on Cash

Gross Rent Multiplier

After Tax Cash on Cash

Return on Asset

Effective Tax Rate

Value Using Acquisition Cap Rate

Measures of Investment PerformanceBefore Tax After Tax

End of Year

Debt Service Coverage Ratio

Loan BalanceLoan to Value

Acquisition Cap Rate

Input Cells Formula Cells

LegendCCIM InstituteEquipping the world’s best minds in commercial real estate

Investment Benchmarks

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24%

($2,000,000)

($1,800,000)

($1,600,000)

($1,400,000)

($1,200,000)

($1,000,000)

($800,000)

($600,000)

($400,000)

($200,000)

$0

Purchase

Lease

Discount Rate

Afte

r T

ax

Ne

t Pre

sen

t Va

lue

EOY 10 Sales Price $4,418,000

Discount Rate Sensitivity

6.15%

$15,

000

$15,

500

$16,

000

$16,

500

$17,

000

$17,

500

$18,

000

$18,

500

$19,

000

$19,

500

$20,

000

($7,000,000)

($6,000,000)

($5,000,000)

($4,000,000)

($3,000,000)

($2,000,000)

($1,000,000)

$0

Purchase Lease

EOY 10 Sales Price (000)

Aft

er T

ax N

et P

rese

nt V

alue

Discount Rate 9.00%

Sales Price Sensitivity

$20,069,653


shopping?




decision?


keep it simple?


make my point?


lingo?


interesting?

REIWISE @ STDB.com

planEASE @ www.planease.com

The CCIM Millionaire Next Door

An astounding 85 percent of self-made millionaires in America admitted that they were no more intelligent or talented then others, but they “worked much harder”

than anyone else, for a much longer time.

The Millionaire Next Door, Stanley & Danko

What can I do?• Qualify and don’t waste anyone’s time• Let them know they’re important• Give your trust & earn their trust• Use all of your knowledge & skills• Avoid jargon• Read and understand your audience• Be brief (you can always elaborate)• Get them involved & use visuals• Ask for the order

Thank you for attending!

Steven R. Price, CCIMPrice Properties, Inc.

Colorado Springs, [email protected]