|
Average 7 unit building- 2 bed & 1 bath each, renting for
$750.00 per month.
PRICE AND FINANCING AT 8 X GROSS RENTAL INCOME
| PURCHASE PRICE |
500,000 |
100% |
8 X Annual Rental Income |
| Down Payment |
125,000 |
25% |
|
| Loan: @6% amortized 30 years |
375,000 |
75% |
1st.TD |
|
FIRST YEAR OPERATING STATEMENT |
| Annual Gross Rental Income |
63,000 |
100% |
|
| Less: expenses including 7% mgt. & 5% vacancy |
25,200 |
40% |
|
| NET OPERATING INCOME |
37,800 |
60% |
|
| Less: Loan Payments |
26,979 |
|
| NET CASH FLOW |
10,821 |
8.6% on cash |
|
|
FIRST YEAR INVESTMENT RECAP |
| NET CASH FLOW |
10,821 |
|
| Plus: 1st. yr. principal reduction |
4,605 |
|
| Plus: tax savings - depreciation |
945 |
assume 40% Fed & State tax rate |
| 1st. yr. After Tax Yield on Equity |
16,371 |
13% on cash |
|
5 years later....
FIFTH YEAR PROJECTION - INCOME AND EXPENSES EACH RISE 4%
PER YEAR
| CURRENT VALUE |
613,000 |
100% |
4% yearly rent increase X 8 rent multiplier
=$113,000 increase in value plus $26,000 principal reduction=$139,000
equity increase |
| Loan balance |
348,943 |
57% |
| Equity ($125,000 + $139,000) |
264,000 |
43% |
|
FIFTH YEAR OPERATING STATEMENT |
| Annual Gross Rental Income |
76,650 |
100% |
increased 4% per year |
| Less: expenses including mgt. |
30,659 |
40% |
increased 4% per year |
| NET OPERATING INCOME |
45,991 |
60% |
increased 21% over 5 years |
| Less: Loan Payments |
26,979 |
Payment remains constant |
| NET CASH FLOW |
19,012 |
15% on cash |
increased 2.4 X over 5 years |
|
FIFTH YEAR INVESTMENT RECAP |
| NET CASH FLOW |
19,012 |
|
| Plus: principal reduction |
5,372 |
|
| Plus: tax savings/ depreciation |
4,363 |
40% shelter on positive cash flow of 14,050
assuming 40% fed & state rate |
| 5th year After Tax Yield |
28,747 |
23% on $125,000 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
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