Executive Summary
Multifamily
Investment strategy: Rental Property
The main home is a 2 bed 1 bath (1107 sq ft) and the mother-in-law suite is a 1 bed 1 bath (527 sq ft). The house can qualify for conventional financing.
Year built – Main home: 1925, Mother-in-law suite: 1980
Off Market Properties
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Financial Analysis
| Cash on Cash Return | 12.45 % |
| Internal Rate of Return (IRR) | 39.79 % |
| Capitalization Rate | 6.95 % |
| Gross Rent Multiplier (GRM) | 9.40 |
| Debt-coverage Ratio (DCR) | 1.22 |
| Operating Expense Ratio (OER) | 32.69 % |
| After Repair Value | $ 141,000 |
| Profit/Equity From Rehab | $ 20,910 |
Operating Analysis
| Rent | $ 1,250/mo |
| Gross Operating Income (GOI) | $ 14,550 |
| Total Expenses | $ 4,756 |
| Net Operating Income (NOI) | $ 9,794 |
| Annual Debt Service | $ 8,040 |
| Cash Flow Before Taxes (CFBT) | $ 1,754 |
| Income Tax Liability | $ 29 |
| Cash Flow After Taxes (CFAT) | $ 1,725 |
Financial Breakdown
| Purchase Price | $ 97,000 |
| Purchase Costs | $ 3,090 |
| Repair/Construction Costs | $ 20,000 |
| Total Capital Needed | $ 120,090 |
| Financing | $ 106,000 |
| Total Cash Needed | $ 14,090 |
| Cash at Closing | $ 1,590 |
| Cash During Rehab | $ 12,500 |
Property Description
| Purchase Price | $ 97,000 |
| Address | 3102 E Shadowlawn Ave , Tampa, 33610, FL |
| Year Built | 1971 |
| Type | Singlefamily |
| Size | 1012 SF |
| Bedrooms | 3 |
| Bathrooms | 1 |
Operating Analysis
Annual Property Operating Data
| Incomes | % of GOI | |
|---|---|---|
| Gross Scheduled Income | $ 15,000 | |
| Total Gross Income | $ 15,000 | |
| Vacancy loss | $ 450 | |
| Gross Operating Income | $ 14,550 | 100.00 % |
| Expenses | ||
| Property manager | $ 1,455 | 10.00 % |
| Insurance | $ 1,000 | 6.87 % |
| Repairs | $ 1,000 | 6.87 % |
| Property tax | $ 1,301 | 8.94 % |
| Total Expenses | $ 4,756 | 32.69 % |
| Net Operating Income | $ 9,794 | 67.31 % |
Cash Flow (Year 1)
| Net Operating Income | $ 9,794 | 67.31 % |
| Annual Debt Service | $ 8,040 | 55.26 % |
| Cash Flow Before Taxes (CFBT) | $ 1,754 | 12.06 % |
| Income Tax Liability | $ 29 | 0.20 |
| Cash Flow After Taxes (CFAT) | $ 1,725 | 11.85 % |
Operating Ratios
| Operating Expense Ratio | 32.69 % |
| Break-Even Ratio | 87.94 % |
Financial Analysis
Financial Measures
| Net Present Value | $ 37,079 |
| Internal Rate of Return | 39.79 % |
| Profitability Index | 3.63 |
| Annual Depreciation | $ 2,822 |
Holding period of 5 years and discount rate of 5.00% 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.
Investment Return Ratios
| Cash on Cash Return | 12.45 % |
| Return on Investment | 33.10 % |
| Capitalization Rate | 6.95 % |
| Gross Rental Yield | 15.46 % |
| Gross Rent Multiplier | 9.40 |
Financing Overview
| Financing | % of ARV | |
|---|---|---|
| Down Payment | $ 0 | 0.00 % |
| BRRRR @ 75% LTV of ARV 141k | $ 106,000 | 75.18 % |
| Loan to Value Ratio | 109.28 % | |
| Loan to Cost Ratio | 90.60 % | |
| Debt Coverage Ratio | 1.22 | |
| Type | Amortized |
| Loan Amount | $ 106,000 |
| Down payment (0%) | $ 0 |
| Amortization | 30 years |
| Interest Rate | 6.50 % |
| Monthly Payment | $ 669.99 |
BRRRR @ 75% LTV of ARV 141k
Financing of: Specific amount ($ 106,000)
Long-term Cash Flow Forecast
| Year | 0 | 1 | 2 | 3 | 4 | 5 |
|---|---|---|---|---|---|---|
| Operational Analysis | ||||||
| Gross Scheduled Income | 0 | 15,000 | 15,300 | 15,606 | 15,918 | 16,236 |
| Vacancy Loss | 0 | 450 | 459 | 468 | 478 | 487 |
| Gross Operating Income | 0 | 14,550 | 14,841 | 15,138 | 15,441 | 15,749 |
| Expenses | 0 | 4,756 | 4,851 | 4,948 | 5,047 | 5,148 |
| Net Operating Income | 0 | 9,794 | 9,990 | 10,190 | 10,393 | 10,601 |
| Loan Payment | 0 | 8,040 | 8,040 | 8,040 | 8,040 | 8,040 |
| Payment Interest Part | 0 | 6,855 | 6,776 | 6,691 | 6,601 | 6,504 |
| Payment Principal Part | 0 | 1,185 | 1,264 | 1,349 | 1,439 | 1,536 |
| Cash Flow | ||||||
| Repairs/Construction | 20,000 | 0 | 0 | 0 | 0 | 0 |
| Cash Flow Before Taxes | -14,090 | 1,754 | 1,950 | 2,150 | 2,354 | 2,561 |
| Depreciation | 0 | 2,822 | 2,822 | 2,822 | 2,822 | 2,822 |
| Taxes | 0 | 29 | 98 | 169 | 243 | 319 |
| Cash Flow After Taxes | -14,090 | 1,725 | 1,852 | 1,981 | 2,111 | 2,243 |
Note: All amounts in the table above are in $
Resale Analysis
Resale Price Evaluation Methods
The property is sold after 5 years.
| Appreciation (3.00%) | $ 163,458 |
| Cap Rate (6.95%) & NOI | $ 152,537 |
| Gross Rent Multiplier | $ 152,623 |
Sale Proceeds
| Projected Selling Price | $ 163,458 |
| Costs of Sale (6.00%) | $ 9,807 |
| 1. Loan Balance Payoff | $ 99,228 |
| Net Sale Proceeds Before Tax | $ 54,423 |
In the resale analysis we do not include any calculation for taxes that might be owed on sale of the property. The tax laws for the resale are rather complex and subjected to frequent changes, and are different in every country.
Net Assets and Yield
| Net Assets | |
|---|---|
| Sale Proceeds Before Tax | $ 54,423 |
| Investor Cash Outlay | $ 14,090 |
| Net Assets | $ 40,333 |
| Average Yield | |
| Annual Net Assets | $ 8,067 |
| Average Cash Flow (After Taxes) | $ 1,534 |
| Average Annual Gain (After Taxes) | $ 9,600 |
| Average Annual Yield (After Taxes) | 9.90 % |
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