|
6 unit building composed of 2+ bedrooms units renting
for $1,400 per month.
PRICE AND FINANCING AT 10 X GROSS RENTAL INCOME
| PURCHASE PRICE |
1,000,000 |
100% |
10 X Annual Rental Income |
| Down Payment |
400,000 |
40% |
|
| Loans: @6% amortized 30 years |
600,000 |
60% |
1st.TD |
|
FIRST YEAR OPERATING STATEMENT |
| Annual Gross Rental Income |
100,000 |
100% |
|
| Less: expenses including 7%mgt. & 5% vacancy |
40,000 |
40% |
|
| NET OPERATING INCOME |
60,000 |
60% |
|
| Less: Loan Payments |
43,167 |
|
| NET CASH FLOW |
16,833 |
4% on cash |
|
|
FIRST YEAR INVESTMENT RECAP |
| NET CASH FLOW |
16,833 |
|
| Plus: 1st. yr. mortgage reduction |
7,368 |
|
| Plus: tax savings - depreciation |
Generally speaking, to purchase this size
building you would earn over $125,000 per year which would exclude any
excess depreciation tax savings, however, the $16,833 would be sheltered by
depreciation. |
| 1st. yr. After Tax Yield on Equity |
24,201 |
6% on cash |
|
5 years later....
FIFTH YEAR PROJECTION - INCOME AND EXPENSES EACH RISE 5%
PER YEAR
| CURRENT VALUE |
1,276,000 |
100% |
5% yearly rent increase X 10 rent multiplier
=$276,000 increase in value plus $41,673 principal reduction=$317,673
equity increase |
| Loan balance |
558,326 |
44% |
| Equity ($400,000 + $317,673) |
717,673 |
56% |
|
FIFTH YEAR OPERATING STATEMENT |
| Annual Gross Rental Income |
127,500 |
100% |
increased 5% per year |
| Less: expenses including mgt. |
48,666 |
38% |
increased 4% per year |
| NET OPERATING INCOME |
78,834 |
62% |
increased 26% over 5 years |
| Less: Loan Payments |
43,167 |
Payment remains constant |
| NET CASH FLOW |
35,667 |
8.9% on cash |
increased 3.3 X over 5 years |
|
FIFTH YEAR INVESTMENT RECAP |
| NET CASH FLOW |
35,667 |
|
| Plus: principal reduction |
9,361 |
|
| Plus: tax savings/ depreciation |
8,400 |
Possibly:50% depreciation shelter on positive
cash flow of 35,667 assuming 50% fed & state rate after $9,361
principal reduction credit |
| 5th year After Tax Yield |
53,428 |
13% on $400,000 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
|
