Two to four unit buildings can be financed with
0%, 5%,10% and 20% down payments. The lower the down payment the more
documentation is required by the lender.
A 5% down loan is a "full
Doc" loan.
PRICE AND FINANCING FOR A 4 UNIT BUILDING USING 10% DOWN. EACH UNIT RENTS FOR
$750.00 PER MONTH.
| PURCHASE PRICE |
420,000 |
100% |
11.7 X Annual Rental Income |
| Down Payment |
42,000 |
10% |
|
Loan: 1st. TD $336,000 @6.3%.
2nd TD of $42,000 @10.5%. |
378,000 |
|
|
|
FIRST YEAR OPERATING STATEMENT |
| Annual Gross Rental Income |
36,000 |
100% |
|
| Less: expenses including 5% vacancy & 5% maintenance |
13,560 |
38% |
|
| NET OPERATING INCOME |
22,440 |
72% |
|
| Less: Loan Payments |
29,342 |
|
| NET CASH FLOW |
(6,902) |
|
|
|
FIRST YEAR INVESTMENT RECAP |
| NET CASH FLOW- (negative) |
(6,902) |
The tax savings offset the negative cash flow.
Improve the building and
raise rents which offsets your payment and increases value. |
| Plus: 1st. yr. mortgage reduction |
4,305 |
| Plus: tax savings - $9,164 depreciation + negative cash flow
x 40% tax rate= |
6,426 |
| 1st. yr. After Tax Yield |
(476) |
|
5 years later....
FIFTH YEAR PROJECTION - INCOME RISES 6% PER YEAR, EXPENSES
RISE 3% PER YEAR
| CURRENT VALUE |
537,568 |
100% |
6% yearly rent increases X 11.7 rent multiplier
=$117,568 increase in value plus $22,200 principal reduction=$139,768
increase in equity |
| Loan balance |
355,799 |
76% |
| Equity includes $42,000 down payment |
181,769 |
|
|
FIFTH YEAR OPERATING STATEMENT |
| Annual Gross Rental Income |
45,946 |
100% |
increased 6% per year |
| Less: operating expenses |
15,719 |
35% |
increased 3% per year |
| NET OPERATING INCOME |
30,227 |
65% |
increased 35% over 5 years |
| Less: Loan Payments |
29,342 |
Payment remains constant |
| NET CASH FLOW |
885 |
|
|
|
FIFTH YEAR INVESTMENT RECAP |
| NET CASH FLOW |
885 |
|
| Plus: principal reduction |
5,014 |
|
| Plus: tax savings |
6,426 |
|
| 5th year After Tax Yield |
12,290 |
59% on $42,000 down payment |
Economic Models
310-493-1999
Staff@SafariRealtors.com
Safari Group Keller Williams Beach Cities
1601 pacific Coast Highway #265
Hermosa Beach CA, 90254
|
