Example Real Estate Project

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PROJECTED STATEMENTS OF FINANCIAL POSITION

ctual results could vary significantly from those projected because any projection of the future is subject to uncertainties.is suggested that your accountant be consulted to verify the accuracy of any tax considerations.

roperty Name &/or Address: OA Kirkman

umber of Apartment Units: 1cenario: Purchase with no renovation

ASSUMPTIONS

URCHASE COSTS:

Price (+) $43,000 Price / Unit: $43,000

Cap rate excluding reserves 9.2%Legal & Closing Costs (+) 1,000 Cap rate including reserves 7.1%1st Mortgage Amount (-) 34,400Mortgage Points/Fees (+) 344 Gross Income Multiple: 6.0Property Upgrades & Operating Loss [*1+] 0Sec. Dep. (-) 500Reserves (+) 0CASH NEEDED TO PURCHASE $9,444

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NCOME AND EXPENSES: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 YeaAnnual income increase 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.Annual expense increase 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.Vacancy and Delinquency 3.8% 3.8% 3.8% 3.8% 3.8% 3.8% 3.Variable Expenses / Unit / Year $1,220Asset Management Fee 10.00% 1st Yr Average Monthly Rent: $6Reserves / Unit / Year $900 1st Yr Average Annual Rent: $7,200.Property Taxes 1st Yr Total Expenses / Unit / Year: $2,9Tax district Madison 1st Yr Total Expenses as % of PGI: 4

Mill Rate / $1,000 24.58$Assumed Assessment/Price Ratio 100.00%

MORTGAGE TERMS:Loan / Value Ratio 80%Interest Rate: 6.00%Amortization Period (years): 20Mortg. Closing Pts. & Costs 1.0%

NCOME TAX CONSIDERATIONS:Years allowed for Cost Recovery: 27.5 Land Allocation: $8,600Buyer's Income Tax Bracket: 40.0% Building Allocation: 34,400

e-SALE OF PROPERTY:Cap Rate To Establish Value 10.00%

PROFORMA PROFIT AND LOSS STATEMENT

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 YeaNCOME

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Rental Income at Full Occupancy $7,200 $7,416 $7,638 $7,868 $8,104 $8,347 $8,Laundry and Parking (+) 0 0 0 0 0 0Interest on Reserves (+) 0 0 0 0 0 0Other: S.D. forfeitures, etc. (+) 0 0 0 0 0 0Potential Gross Income (PGI or GPI) 7,200 7,416 7,638 7,868 8,104 8,347 8,Rent Loss: Vac. & Del. (-) 277 285 294 303 312 321Effective Gross Income (EGI) 6,923 7,131 7,345 7,565 7,792 8,026 8,

XPENSES

Real Estate Tax 594 612 631 649 669 689Utilities 50 52 53 55 56 58Insurance 400 412 424 437 450 464Asset Management Fee 692 713 734 757 779 803Variable ExpensesPersonnel 0 0 0 0 0 0Office Expense 0 0 0 0 0 0Advertising/Marketing 20 21 21 22 23 23Maintenance and Repairs 1,200 1,236 1,273 1,311 1,351 1,391 1,Rubbish Removal 0 0 0 0 0 0Elevator Maintenance 0 0 0 0 0 0Grounds 0 0 0 0 0 0

Total Variable Expenses 1,220 1,257 1,294 1,333 1,373 1,414 1,Reserves 900 927 955 983 1,013 1,043 1,TOTAL EXPENSES 3,857 3,972 4,091 4,214 4,341 4,471 4,

ET OPERATING INCOME $3,066 $3,158 $3,253 $3,351 $3,451 $3,555 $3,

ash Flow, before tax benefit, Excluding Sale of Property

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Ye

EBT SERVICE

Interest 2,039 1,982 1,922 1,858 1,791 1,719 1,Principal 918 975 1,035 1,099 1,167 1,239 1,Total Debt Service 2,957 2,957 2,957 2,957 2,957 2,957 2,

ASH FLOW, before tax benefit $109 $201 $296 $393 $494 $597 $



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ash Flow After Tax Benefit, Excluding Sale of Property

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

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epreciations or Cost Recovery 1,251 1,251 1,251 1,251 1,251 1,251 1,2axable Income (Loss) (223) (75) 80 242 410 585 7ax Savings (or Payable) 89 30 (32) (97) (164) (234) (3ash Flow after tax benefit (expense) 198 231 264 297 330 363 3

otal Cash & Principal Reduction BenefitsAfter Taxes $1,117 $1,206 $1,299 $1,396 $1,497 $1,602 $1,7

eturn including, cash, principal reduction, tax benefits, and Appreciation

alue Of Property (using Cap Rate) 31,585 32,532 33,508 34,513 35,549 36,615 37,7

otal Cash & Principal Reduction BenefitsAfter Tax Plus Appreciation(assumes property is retained) ($10,299) $2,154 $2,275 $2,401 $2,532 $2,669 $2,8

ercentage Return OnOriginal Investment -109.0% 22.8% 24.1% 25.4% 26.8% 28.3% 29

nternal Rate of Return Calculation

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Ye

($9,444) $109 $201 $296 $393 $494 $597 $11,7

ash on Cash Return on Investment 1.2% 2.1% 3.1% 4.2% 5.2% 6.3%

nternal Rate of Return 6

OOTNOTES



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* Appreciation on the property would further enhance the return.In the event Internal Revenue Code section 1031 is not taken advantage of, then recapture tax will be due.

1] Upgrades:lat Roof 1 $0 $0xterior Paint 1 $0 $0ront of Building 1 $0 $0enovation to Units 113 $0 $0

allway 1 $0 $0andscaping 1 $0 $0arking Lot 1 $0 $0wimming Pool 1 $0 $0lub House/Weight Room 1 $0 $0aundry Room 1 $0 $0nderground Parking, lighting 1 $0 $0nderground Parking/dumpster/sprinkler 1 $0 $0ontingency 1 $0 $0llowance to protect against underbudgeting 1 $0 $0

0 $0 $0OTAL -$enovations Per Unit -$

Monthly rent increase above 3% inflation -$otal Increase above inflation -$

eturn on Upgrades Budget #DIV/0!



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Interest Rate 6.00%Amort. 20

Balance Payment Interest Principal Annual Int Annual Pr. Re1 $34,400 $246.45 $172.00 $74.45 $34,325.55

2 $34,326 $246.45 $171.63 $74.82 $34,250.723 $34,251 $246.45 $171.25 $75.20 $34,175.524 $34,176 $246.45 $170.88 $75.57 $34,099.955 $34,100 $246.45 $170.50 $75.95 $34,024.006 $34,024 $246.45 $170.12 $76.33 $33,947.677 $33,948 $246.45 $169.74 $76.71 $33,870.958 $33,871 $246.45 $169.35 $77.10 $33,793.859 $33,794 $246.45 $168.97 $77.48 $33,716.37

10 $33,716 $246.45 $168.58 $77.87 $33,638.5011 $33,639 $246.45 $168.19 $78.26 $33,560.2412 $33,560 $246.45 $167.80 $78.65 $33,481.59 $2,039.02 $918.4113 $33,482 $246.45 $167.41 $79.04 $33,402.54

14 $33,403 $246.45 $167.01 $79.44 $33,323.1115 $33,323 $246.45 $166.62 $79.84 $33,243.2716 $33,243 $246.45 $166.22 $80.24 $33,163.0317 $33,163 $246.45 $165.82 $80.64 $33,082.4018 $33,082 $246.45 $165.41 $81.04 $33,001.3619 $33,001 $246.45 $165.01 $81.45 $32,919.91

20 $32,920 $246.45 $164.60 $81.85 $32,838.0621 $32,838 $246.45 $164.19 $82.26 $32,755.7922 $32,756 $246.45 $163.78 $82.67 $32,673.1223 $32,673 $246.45 $163.37 $83.09 $32,590.0324 $32,590 $246.45 $162.95 $83.50 $32,506.53 $1,982.37 $975.0625 $32,507 $246.45 $162.53 $83.92 $32,422.6126 $32,423 $246.45 $162.11 $84.34 $32,338.27

27 $32,338 $246.45 $161.69 $84.76 $32,253.5128 $32,254 $246.45 $161.27 $85.18 $32,168.3329 $32,168 $246.45 $160.84 $85.61 $32,082.7230 $32,083 $246.45 $160.41 $86.04 $31,996.68

31 $31,997 $246.45 $159.98 $86.47 $31,910.2132 $31,910 $246.45 $159.55 $86.90 $31,823.3133 $31,823 $246.45 $159.12 $87.34 $31,735.9734 $31,736 $246.45 $158.68 $87.77 $31,648.2035 $31,648 $246.45 $158.24 $88.21 $31,559.9936 $31,560 $246.45 $157.80 $88.65 $31,471.34 $1,922.23 $1,035.2037 $31,471 $246.45 $157.36 $89.10 $31,382.2438 $31,382 $246.45 $156.91 $89.54 $31,292.70

39 $31,293 $246.45 $156.46 $89.99 $31,202.7140 $31,203 $246.45 $156.01 $90.44 $31,112.2741 $31,112 $246.45 $155.56 $90.89 $31,021.3842 $31,021 $246.45 $155.11 $91.35 $30,930.0443 $30,930 $246.45 $154.65 $91.80 $30,838.2344 $30,838 $246.45 $154.19 $92.26 $30,745.9745 $30,746 $246.45 $153.73 $92.72 $30,653.2546 $30,653 $246.45 $153.27 $93.19 $30,560.0747 $30,560 $246.45 $152.80 $93.65 $30,466.41


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100 $24,893 $246.45 $124.46 $121.99 $24,770.81101 $24,771 $246.45 $123.85 $122.60 $24,648.21102 $24,648 $246.45 $123.24 $123.21 $24,525.00

103 $24,525 $246.45 $122.63 $123.83 $24,401.17104 $24,401 $246.45 $122.01 $124.45 $24,276.73105 $24,277 $246.45 $121.38 $125.07 $24,151.66

106 $24,152 $246.45 $120.76 $125.69 $24,025.96107 $24,026 $246.45 $120.13 $126.32 $23,899.64108 $23,900 $246.45 $119.50 $126.95 $23,772.69 $1,474.98 $1,482.45109 $23,773 $246.45 $118.86 $127.59 $23,645.10110 $23,645 $246.45 $118.23 $128.23 $23,516.87111 $23,517 $246.45 $117.58 $128.87 $23,388.00112 $23,388 $246.45 $116.94 $129.51 $23,258.49113 $23,258 $246.45 $116.29 $130.16 $23,128.33

114 $23,128 $246.45 $115.64 $130.81 $22,997.52115 $22,998 $246.45 $114.99 $131.46 $22,866.06116 $22,866 $246.45 $114.33 $132.12 $22,733.94117 $22,734 $246.45 $113.67 $132.78 $22,601.15

118 $22,601 $246.45 $113.01 $133.45 $22,467.71119 $22,468 $246.45 $112.34 $134.11 $22,333.59120 $22,334 $246.45 $111.67 $134.78 $22,198.81 $1,383.55 $1,573.88121 $22,199 $246.45 $110.99 $135.46 $22,063.35122 $22,063 $246.45 $110.32 $136.14 $21,927.21123 $21,927 $246.45 $109.64 $136.82 $21,790.40

124 $21,790 $246.45 $108.95 $137.50 $21,652.90125 $21,653 $246.45 $108.26 $138.19 $21,514.71126 $21,515 $246.45 $107.57 $138.88 $21,375.83127 $21,376 $246.45 $106.88 $139.57 $21,236.26128 $21,236 $246.45 $106.18 $140.27 $21,095.99129 $21,096 $246.45 $105.48 $140.97 $20,955.02130 $20,955 $246.45 $104.78 $141.68 $20,813.34

131 $20,813 $246.45 $104.07 $142.39 $20,670.95132 $20,671 $246.45 $103.35 $143.10 $20,527.85133 $20,528 $246.45 $102.64 $143.81 $20,384.04134 $20,384 $246.45 $101.92 $144.53 $20,239.51

135 $20,240 $246.45 $101.20 $145.25 $20,094.25136 $20,094 $246.45 $100.47 $145.98 $19,948.27137 $19,948 $246.45 $99.74 $146.71 $19,801.56138 $19,802 $246.45 $99.01 $147.44 $19,654.12139 $19,654 $246.45 $98.27 $148.18 $19,505.94140 $19,506 $246.45 $97.53 $148.92 $19,357.01141 $19,357 $246.45 $96.79 $149.67 $19,207.35142 $19,207 $246.45 $96.04 $150.42 $19,056.93

143 $19,057 $246.45 $95.28 $151.17 $18,905.76144 $18,906 $246.45 $94.53 $151.92 $18,753.84145 $18,754 $246.45 $93.77 $152.68 $18,601.16146 $18,601 $246.45 $93.01 $153.45 $18,447.71147 $18,448 $246.45 $92.24 $154.21 $18,293.50148 $18,293 $246.45 $91.47 $154.98 $18,138.51149 $18,139 $246.45 $90.69 $155.76 $17,982.75150 $17,983 $246.45 $89.91 $156.54 $17,826.21151 $17,826 $246.45 $89.13 $157.32 $17,668.89


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152 $17,669 $246.45 $88.34 $158.11 $17,510.78153 $17,511 $246.45 $87.55 $158.90 $17,351.89154 $17,352 $246.45 $86.76 $159.69 $17,192.19

155 $17,192 $246.45 $85.96 $160.49 $17,031.70156 $17,032 $246.45 $85.16 $161.29 $16,870.41157 $16,870 $246.45 $84.35 $162.10 $16,708.31

158 $16,708 $246.45 $83.54 $162.91 $16,545.40159 $16,545 $246.45 $82.73 $163.73 $16,381.67160 $16,382 $246.45 $81.91 $164.54 $16,217.13161 $16,217 $246.45 $81.09 $165.37 $16,051.76162 $16,052 $246.45 $80.26 $166.19 $15,885.57163 $15,886 $246.45 $79.43 $167.02 $15,718.54164 $15,719 $246.45 $78.59 $167.86 $15,550.68165 $15,551 $246.45 $77.75 $168.70 $15,381.99

166 $15,382 $246.45 $76.91 $169.54 $15,212.44167 $15,212 $246.45 $76.06 $170.39 $15,042.05168 $15,042 $246.45 $75.21 $171.24 $14,870.81169 $14,871 $246.45 $74.35 $172.10 $14,698.71

170 $14,699 $246.45 $73.49 $172.96 $14,525.75171 $14,526 $246.45 $72.63 $173.82 $14,351.93172 $14,352 $246.45 $71.76 $174.69 $14,177.24173 $14,177 $246.45 $70.89 $175.57 $14,001.67174 $14,002 $246.45 $70.01 $176.44 $13,825.23175 $13,825 $246.45 $69.13 $177.33 $13,647.90

176 $13,648 $246.45 $68.24 $178.21 $13,469.69177 $13,470 $246.45 $67.35 $179.10 $13,290.59178 $13,291 $246.45 $66.45 $180.00 $13,110.59179 $13,111 $246.45 $65.55 $180.90 $12,929.69180 $12,930 $246.45 $64.65 $181.80 $12,747.88181 $12,748 $246.45 $63.74 $182.71 $12,565.17182 $12,565 $246.45 $62.83 $183.63 $12,381.54

183 $12,382 $246.45 $61.91 $184.54 $12,197.00184 $12,197 $246.45 $60.98 $185.47 $12,011.53185 $12,012 $246.45 $60.06 $186.39 $11,825.14186 $11,825 $246.45 $59.13 $187.33 $11,637.81

187 $11,638 $246.45 $58.19 $188.26 $11,449.55188 $11,450 $246.45 $57.25 $189.20 $11,260.34189 $11,260 $246.45 $56.30 $190.15 $11,070.19190 $11,070 $246.45 $55.35 $191.10 $10,879.09191 $10,879 $246.45 $54.40 $192.06 $10,687.03192 $10,687 $246.45 $53.44 $193.02 $10,494.02193 $10,494 $246.45 $52.47 $193.98 $10,300.03194 $10,300 $246.45 $51.50 $194.95 $10,105.08

195 $10,105 $246.45 $50.53 $195.93 $9,909.16196 $9,909 $246.45 $49.55 $196.91 $9,712.25197 $9,712 $246.45 $48.56 $197.89 $9,514.36198 $9,514 $246.45 $47.57 $198.88 $9,315.48199 $9,315 $246.45 $46.58 $199.87 $9,115.60200 $9,116 $246.45 $45.58 $200.87 $8,914.73201 $8,915 $246.45 $44.57 $201.88 $8,712.85202 $8,713 $246.45 $43.56 $202.89 $8,509.96203 $8,510 $246.45 $42.55 $203.90 $8,306.06


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204 $8,306 $246.45 $41.53 $204.92 $8,101.14205 $8,101 $246.45 $40.51 $205.95 $7,895.19206 $7,895 $246.45 $39.48 $206.98 $7,688.21

207 $7,688 $246.45 $38.44 $208.01 $7,480.20208 $7,480 $246.45 $37.40 $209.05 $7,271.15209 $7,271 $246.45 $36.36 $210.10 $7,061.06

210 $7,061 $246.45 $35.31 $211.15 $6,849.91211 $6,850 $246.45 $34.25 $212.20 $6,637.71212 $6,638 $246.45 $33.19 $213.26 $6,424.44213 $6,424 $246.45 $32.12 $214.33 $6,210.11214 $6,210 $246.45 $31.05 $215.40 $5,994.71215 $5,995 $246.45 $29.97 $216.48 $5,778.23216 $5,778 $246.45 $28.89 $217.56 $5,560.67217 $5,561 $246.45 $27.80 $218.65 $5,342.02

218 $5,342 $246.45 $26.71 $219.74 $5,122.28219 $5,122 $246.45 $25.61 $220.84 $4,901.44220 $4,901 $246.45 $24.51 $221.95 $4,679.49221 $4,679 $246.45 $23.40 $223.05 $4,456.44

222 $4,456 $246.45 $22.28 $224.17 $4,232.27223 $4,232 $246.45 $21.16 $225.29 $4,006.98224 $4,007 $246.45 $20.03 $226.42 $3,780.56225 $3,781 $246.45 $18.90 $227.55 $3,553.01226 $3,553 $246.45 $17.77 $228.69 $3,324.32227 $3,324 $246.45 $16.62 $229.83 $3,094.49

228 $3,094 $246.45 $15.47 $230.98 $2,863.51229 $2,864 $246.45 $14.32 $232.13 $2,631.38230 $2,631 $246.45 $13.16 $233.30 $2,398.08231 $2,398 $246.45 $11.99 $234.46 $2,163.62232 $2,164 $246.45 $10.82 $235.63 $1,927.99233 $1,928 $246.45 $9.64 $236.81 $1,691.17234 $1,691 $246.45 $8.46 $238.00 $1,453.18

235 $1,453 $246.45 $7.27 $239.19 $1,213.99236 $1,214 $246.45 $6.07 $240.38 $973.61237 $974 $246.45 $4.87 $241.58 $732.02238 $732 $246.45 $3.66 $242.79 $489.23

239 $489 $246.45 $2.45 $244.01 $245.23240 $245 $246.45 $1.23 $245.23 $0.00241 $0 $246.45 #NUM! #NUM! #NUM!242 #NUM! $246.45 #NUM! #NUM! #NUM!243 #NUM! $246.45 #NUM! #NUM! #NUM!244 #NUM! $246.45 #NUM! #NUM! #NUM!245 #NUM! $246.45 #NUM! #NUM! #NUM!246 #NUM! $246.45 #NUM! #NUM! #NUM!

247 #NUM! $246.45 #NUM! #NUM! #NUM!248 #NUM! $246.45 #NUM! #NUM! #NUM!249 #NUM! $246.45 #NUM! #NUM! #NUM!250 #NUM! $246.45 #NUM! #NUM! #NUM!251 #NUM! $246.45 #NUM! #NUM! #NUM!252 #NUM! $246.45 #NUM! #NUM! #NUM!253 #NUM! $246.45 #NUM! #NUM! #NUM!254 #NUM! $246.45 #NUM! #NUM! #NUM!255 #NUM! $246.45 #NUM! #NUM! #NUM!


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256 #NUM! $246.45 #NUM! #NUM! #NUM!257 #NUM! $246.45 #NUM! #NUM! #NUM!258 #NUM! $246.45 #NUM! #NUM! #NUM!


262 #NUM! $246.45 #NUM! #NUM! #NUM!263 #NUM! $246.45 #NUM! #NUM! #NUM!264 #NUM! $246.45 #NUM! #NUM! #NUM!265 #NUM! $246.45 #NUM! #NUM! #NUM!266 #NUM! $246.45 #NUM! #NUM! #NUM!267 #NUM! $246.45 #NUM! #NUM! #NUM!268 #NUM! $246.45 #NUM! #NUM! #NUM!269 #NUM! $246.45 #NUM! #NUM! #NUM!

270 #NUM! $246.45 #NUM! #NUM! #NUM!271 #NUM! $246.45 #NUM! #NUM! #NUM!272 #NUM! $246.45 #NUM! #NUM! #NUM!273 #NUM! $246.45 #NUM! #NUM! #NUM!

274 #NUM! $246.45 #NUM! #NUM! #NUM!275 #NUM! $246.45 #NUM! #NUM! #NUM!276 #NUM! $246.45 #NUM! #NUM! #NUM!277 #NUM! $246.45 #NUM! #NUM! #NUM!278 #NUM! $246.45 #NUM! #NUM! #NUM!279 #NUM! $246.45 #NUM! #NUM! #NUM!

280 #NUM! $246.45 #NUM! #NUM! #NUM!281 #NUM! $246.45 #NUM! #NUM! #NUM!282 #NUM! $246.45 #NUM! #NUM! #NUM!283 #NUM! $246.45 #NUM! #NUM! #NUM!284 #NUM! $246.45 #NUM! #NUM! #NUM!285 #NUM! $246.45 #NUM! #NUM! #NUM!286 #NUM! $246.45 #NUM! #NUM! #NUM!

287 #NUM! $246.45 #NUM! #NUM! #NUM!288 #NUM! $246.45 #NUM! #NUM! #NUM!289 #NUM! $246.45 #NUM! #NUM! #NUM!290 #NUM! $246.45 #NUM! #NUM! #NUM!

291 #NUM! $246.45 #NUM! #NUM! #NUM!292 #NUM! $246.45 #NUM! #NUM! #NUM!293 #NUM! $246.45 #NUM! #NUM! #NUM!294 #NUM! $246.45 #NUM! #NUM! #NUM!295 #NUM! $246.45 #NUM! #NUM! #NUM!296 #NUM! $246.45 #NUM! #NUM! #NUM!297 #NUM! $246.45 #NUM! #NUM! #NUM!298 #NUM! $246.45 #NUM! #NUM! #NUM!



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uction


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Example Real Estate Project

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Transcript of Example Real Estate Project