Professional Documents
Culture Documents
Property Information
Financing
% of Asking % of Cost
Down Payment: $ 190,000 42.22% 41.30%
Initial Loan Balance: $ 270,000 60.00% 58.70%
Assumptions:
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Financial Measures
Year 1 Year 5 Year 10
Debt Coverage Ratio (DCR) 1.65 1.71 2.00
Loan-to-Value Ratio (LVR) 52.2% 45.0% 36.3%
The initial purchase price of $460,000 includes a property cost of $270,000 ($30,000 below it’s FMV of
$300,000), $180,000 in renovations (which will yield $200,000 in increased value) and an estimated $10,
000 in closing cost and fees.
Total value of $500,000 minus a total cost of $460,000 = $40,000 initial equity.
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Property Appreciation
Initial FMV
Year Annual Rate
$ 500,000
Year 1 2.50% $ 512,500
Year 2 2.50% 525,313
Year 3 2.50% 538,445
Year 4 2.50% 551,906
Year 5 2.50% 565,704
Year 6 2.50% 579,847
Year 7 2.50% 594,343
Year 8 2.50% 609,201
Year 9 2.50% 624,431
Year 10 2.50% 640,042
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Cash Position
Cash Generated in Current Year $ 11,486 $ 11,012 $ 11,645 $ 12,291 $ 12,951
Cash Generated in Previous Years n/a 11,486 22,499 34,143 46,434
Cash Generated from Property Sale 206,178 214,953 224,177 233,872 244,059
Cash Inflow (Outflow) from Refinancing - - - - -
Original Initial Investment (190,000) (190,000) (190,000) (190,000) (190,000)
Total Potential CASH Generated $ 27,665 $ 47,452 $ 68,320 $ 90,306 $ 113,445
Financial Measures
Debt Coverage Ratio (DCR) 1.65 1.56 1.61 1.66 1.71
Loan-to-Value Ratio (LVR) 52.2% 50.4% 48.6% 46.8% 45.0%
Gross Rent Monthly Multiplier (GRM) 100.00 113.89 113.89 113.89 113.89
Gross Rent Yearly Multiplier (GRM) 8.33 9.49 9.49 9.49 9.49
Value of Property Using this GRM 648,000 664,200 680,805 697,825 715,271
Net Present Value (NPV) - Before Taxes 10,103 8,664 7,095 5,436 3,721
Net Present Value (NPV) - After Taxes 7,877 7,190 6,720 6,425 6,270
Internal Rate-of-Return (IRR) - Before Taxes 19.54% 16.14% 14.98% 14.37% 13.99%
Internal Rate-of-Return (IRR) - After Taxes 14.56% 12.12% 11.35% 10.99% 10.79%
Modified Internal Rate-of-Return (MIRR) - Before Taxes 19.54% 15.66% 14.18% 13.30% 12.68%
Modified Internal Rate-of-Return (MIRR) - After Taxes 14.56% 11.79% 10.78% 10.21% 9.82%
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Cash Position
Cash Generated in Current Year $ 13,626 $ 14,315 $ 15,018 $ 15,735 $ 16,467
Cash Generated in Previous Years 59,386 73,012 87,327 102,344 118,079
Cash Generated from Property Sale 254,764 266,010 277,825 290,237 303,277
Cash Inflow (Outflow) from Refinancing - - - - -
Original Initial Investment (190,000) (190,000) (190,000) (190,000) (190,000)
Total Potential CASH Generated $ 137,775 $ 163,336 $ 190,169 $ 218,317 $ 247,823
Financial Measures
Debt Coverage Ratio (DCR) 1.77 1.82 1.88 1.94 2.00
Loan-to-Value Ratio (LVR) 43.2% 41.5% 39.7% 38.0% 36.3%
Gross Rent Monthly Multiplier (GRM) 113.89 113.89 113.89 113.89 113.89
Gross Rent Yearly Multiplier (GRM) 9.49 9.49 9.49 9.49 9.49
Value of Property Using this GRM 733,153 751,481 770,268 789,525 809,263
Net Present Value (NPV) - Before Taxes 1,978 229 (1,508) (3,218) (4,890)
Net Present Value (NPV) - After Taxes 6,228 6,271 6,379 6,534 6,720
Internal Rate-of-Return (IRR) - Before Taxes 13.72% 13.52% 13.36% 13.23% 13.12%
Internal Rate-of-Return (IRR) - After Taxes 10.67% 10.60% 10.54% 10.51% 10.48%
Modified Internal Rate-of-Return (MIRR) - Before Taxes 12.19% 11.78% 11.43% 11.12% 10.85%
Modified Internal Rate-of-Return (MIRR) - After Taxes 9.51% 9.27% 9.06% 8.87% 8.71%
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Potential Rental Income $ 54,000 105.26% $ 55,350 105.26% $ 56,734 105.26% $ 58,152 105.26%
Less: Vacancy & Credit Losses (2,700) -5.26% (2,768) -5.26% (2,837) -5.26% (2,908) -5.26%
0.00% 0.00% 0.00% 0.00%
Effective Rental Income $ 51,300 100.00% $ 52,583 100.00% $ 53,897 100.00% $ 55,244 100.00%
Other Income - 0.00% - 0.00% - 0.00% - 0.00%
Gross Operating Income $ 51,300 100.00% $ 52,583 100.00% $ 53,897 100.00% $ 55,244 100.00%
Operating Expenses
Accounting 2,000 3.90% 2,020 3.84% 2,040 3.79% 2,061 3.73%
Advertising 100 0.19% 101 0.19% 102 0.19% 103 0.19%
Association Fees - 0.00% - 0.00% - 0.00% - 0.00%
Auto & Travel - 0.00% - 0.00% - 0.00% - 0.00%
Cleaning 100 0.19% 101 0.19% 102 0.19% 103 0.19%
Commissions - 0.00% - 0.00% - 0.00% - 0.00%
Insurance 2,500 4.87% 2,525 4.80% 2,550 4.73% 2,576 4.66%
Landscaping 300 0.58% 303 0.58% 306 0.57% 309 0.56%
Legal 1,000 1.95% 1,010 1.92% 1,020 1.89% 1,030 1.86%
Maintenance 500 0.97% 505 0.96% 510 0.95% 515 0.93%
Management Fee 3,780 7.37% 3,875 7.37% 3,971 7.37% 4,071 7.37%
On-Site Management - 0.00% - 0.00% - 0.00% - 0.00%
Payroll - 0.00% - 0.00% - 0.00% - 0.00%
Pest Control - 0.00% - 0.00% - 0.00% - 0.00%
Professional Fees 500 0.97% 505 0.96% 510 0.95% 515 0.93%
Repairs 1,000 1.95% 1,010 1.92% 1,020 1.89% 1,030 1.86%
Supplies 500 0.97% 505 0.96% 510 0.95% 515 0.93%
Taxes: 0.00% 0.00% 0.00% 0.00%
Property Taxes 4,500 8.77% 4,545 8.64% 4,590 8.52% 4,636 8.39%
Personal Property - 0.00% - 0.00% - 0.00% - 0.00%
Payroll - 0.00% - 0.00% - 0.00% - 0.00%
Other - 0.00% - 0.00% - 0.00% - 0.00%
Trash Removal - 0.00% - 0.00% - 0.00% - 0.00%
Utilities: 0.00% 0.00% 0.00% 0.00%
Gas 200 0.39% 202 0.38% 204 0.38% 206 0.37%
Electricity 200 0.39% 202 0.38% 204 0.38% 206 0.37%
Telephone - 0.00% - 0.00% - 0.00% - 0.00%
Water 1,500 2.92% 1,515 2.88% 1,530 2.84% 1,545 2.80%
Other Utilities - 0.00% - 0.00% - 0.00% - 0.00%
Miscellaneous - 0.00% - 0.00% - 0.00% - 0.00%
One-Time Expenses - 0.00% - 0.00% - 0.00% - 0.00%
0.00% 0.00% 0.00%
Total Operating Expenses $ 18,680 36.41% $ 18,924 35.99% $ 19,171 35.57% $ 19,422 35.16%
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Potential Rental Income $ 59,606 105.26% $ 61,096 105.26% $ 62,623 105.26% $ 64,189 105.26%
Less: Vacancy & Credit Losses (2,980) -5.26% (3,055) -5.26% (3,131) -5.26% (3,209) -5.26%
0.00% 0.00% 0.00% 0.00%
Effective Rental Income $ 56,626 100.00% $ 58,041 100.00% $ 59,492 100.00% $ 60,980 100.00%
Other Income - 0.00% - 0.00% - 0.00% - 0.00%
Gross Operating Income $ 56,626 100.00% $ 58,041 100.00% $ 59,492 100.00% $ 60,980 100.00%
Operating Expenses
Accounting 2,081 3.68% 2,102 3.62% 2,123 3.57% 2,144 3.52%
Advertising 104 0.18% 105 0.18% 106 0.18% 107 0.18%
Association Fees - 0.00% - 0.00% - 0.00% - 0.00%
Auto & Travel - 0.00% - 0.00% - 0.00% - 0.00%
Cleaning 104 0.18% 105 0.18% 106 0.18% 107 0.18%
Commissions - 0.00% - 0.00% - 0.00% - 0.00%
Insurance 2,602 4.59% 2,628 4.53% 2,654 4.46% 2,680 4.40%
Landscaping 312 0.55% 315 0.54% 318 0.54% 322 0.53%
Legal 1,041 1.84% 1,051 1.81% 1,062 1.78% 1,072 1.76%
Maintenance 520 0.92% 526 0.91% 531 0.89% 536 0.88%
Management Fee 4,172 7.37% 4,277 7.37% 4,384 7.37% 4,493 7.37%
On-Site Management - 0.00% - 0.00% - 0.00% - 0.00%
Payroll - 0.00% - 0.00% - 0.00% - 0.00%
Pest Control - 0.00% - 0.00% - 0.00% - 0.00%
Professional Fees 520 0.92% 526 0.91% 531 0.89% 536 0.88%
Repairs 1,041 1.84% 1,051 1.81% 1,062 1.78% 1,072 1.76%
Supplies 520 0.92% 526 0.91% 531 0.89% 536 0.88%
Taxes: 0.00% 0.00% 0.00% 0.00%
Property Taxes 4,683 8.27% 4,730 8.15% 4,777 8.03% 4,825 7.91%
Personal Property - 0.00% - 0.00% - 0.00% - 0.00%
Payroll - 0.00% - 0.00% - 0.00% - 0.00%
Other - 0.00% - 0.00% - 0.00% - 0.00%
Trash Removal - 0.00% - 0.00% - 0.00% - 0.00%
Utilities: 0.00% 0.00% 0.00% 0.00%
Gas 208 0.37% 210 0.36% 212 0.36% 214 0.35%
Electricity 208 0.37% 210 0.36% 212 0.36% 214 0.35%
Telephone - 0.00% - 0.00% - 0.00% - 0.00%
Water 1,561 2.76% 1,577 2.72% 1,592 2.68% 1,608 2.64%
Other Utilities - 0.00% - 0.00% - 0.00% - 0.00%
Miscellaneous - 0.00% - 0.00% - 0.00% - 0.00%
One-Time Expenses - 0.00% - 0.00% - 0.00% - 0.00%
0.00% 0.00% 0.00% 0.00%
Total Operating Expenses $ 19,677 33.01% $ 19,937 34.35% $ 20,200 33.95% $ 20,468 33.57%
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Operating Expenses
Accounting 2,166 3.46% 2,187 3.41%
Advertising 108 0.17% 109 0.17%
Association Fees - 0.00% - 0.00%
Auto & Travel - 0.00% - 0.00%
Cleaning 108 0.17% 109 0.17%
Commissions - 0.00% - 0.00%
Insurance 2,707 4.33% 2,734 4.27%
Landscaping 325 0.52% 328 0.51%
Legal 1,083 1.73% 1,094 1.71%
Maintenance 541 0.87% 547 0.85%
Management Fee 4,606 7.37% 4,721 7.37%
On-Site Management - 0.00% - 0.00%
Payroll - 0.00% - 0.00%
Pest Control - 0.00% - 0.00%
Professional Fees 541 0.87% 547 0.85%
Repairs 1,083 1.73% 1,094 1.71%
Supplies 541 0.87% 547 0.85%
Taxes: 0.00% 0.00%
Property Taxes 4,873 7.80% 4,922 7.68%
Personal Property - 0.00% - 0.00%
Payroll - 0.00% - 0.00%
Other - 0.00% - 0.00%
Trash Removal - 0.00% - 0.00%
Utilities: 0.00% 0.00%
Gas 217 0.35% 219 0.34%
Electricity 217 0.35% 219 0.34%
Telephone - 0.00% - 0.00%
Water 1,624 2.60% 1,641 2.56%
Other Utilities - 0.00% - 0.00%
Miscellaneous - 0.00% - 0.00%
One-Time Expenses - 0.00% - 0.00%
0.00% 0.00%
Total Operating Expenses $20,740 33.18% $21,017 32.80%
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