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REAL ESTATE INVESTMENT ANALYSIS

Enter your numbers in the yellow background boxes only.


Purchase Price:
410,000
Down Payment:
123,000
Interest Rate on Loan:
4.50
Term of Loan:
30
Improvement Ratio:
0
No. Yrs. of Depreciation:
27.5
Scheduled Annual Gross Income:
12,000
Vacancy/Collection losses:
0.00
(Annual Operating Expenses)
--------Property taxes :
4,500
Insurance:
350
Electricity:
50
Gas:
0
Oil:
0
Water:
0
Trash:
0
Management:
50.00
Repairs/Maintenance:
0.00
Advertising:
0
Telephone:
0
Other:
0
Other:
0
Other:
0
Other:
0
Annual Increase of Income:
5.00
Annual Increase of Expenses:
5.00
Annual Appreciation Rate:
2.00
Investor's Tax Bracket:
25.00
Capital Gain Tax Rate:
15.00
CGT Rate on Recaptured Depreciation 25.00
Expected Capital Improvements:
2,000
Approx. Buying Costs:
3.00
Approx. Sales Costs:
7.00

% p.a.
yrs.
%
yrs.

% of total price that is allocated to the building for depreciation purposes


27.5 for rental
39.5 years for commercial.

% of income
% of income

%
%
%
%
%
%

p.a.
p.a.
p.a.

%
%

of total
of total

This varies depending on the tax payer.


CGT= capital gains tax (ordinary income)

RESULTS
ACQUISITION DATA

LOAN DATA

Price
Dn. Pymt.
Loan Amt.
Buy Costs
Cap Impr.

Interest %
No. Yrs.
Mo. P & I
Yr. P & I

4.50%
30
1,454
17,450

Yr.1

Yr. 2

410,000
123,000
287,000
12,300
2,000

DEPRECIATION
Land
Improvement
No. Yrs.
Yr. Depr.

100%
0%
27.5
520

410,000
14,300

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

12,000
0
12,000

5.00%
12,600
0
12,600

5.00%
13,230
0
13,230

5.00%
13,892
0
13,892

5.00%
14,586
0
14,586

5.00%
15,315
0
15,315

5.00%
16,081
0
16,081

5.00%
16,885
0
16,885

5.00%
17,729
0
17,729

5.00%
18,616
0
18,616

Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

4,500
350
50
0
0
0
0
6,000
0
0
0
0
0
0
10,900
90.83%

5.00%
4,725
368
53
0
0
0
0
6,300
0
0
0
0
0
0
11,445
90.83%

5.00%
4,961
386
55
0
0
0
0
6,615
0
0
0
0
0
0
12,017
90.83%

5.00%
5,209
405
58
0
0
0
0
6,946
0
0
0
0
0
0
12,618
90.83%

5.00%
5,470
425
61
0
0
0
0
7,293
0
0
0
0
0
0
13,249
90.83%

5.00%
5,743
447
64
0
0
0
0
7,658
0
0
0
0
0
0
13,911
90.83%

5.00%
6,030
469
67
0
0
0
0
8,041
0
0
0
0
0
0
14,607
90.83%

5.00%
6,332
492
70
0
0
0
0
8,443
0
0
0
0
0
0
15,337
90.83%

5.00%
6,649
517
74
0
0
0
0
8,865
0
0
0
0
0
0
16,104
90.83%

5.00%
6,981
543
78
0
0
0
0
9,308
0
0
0
0
0
0
16,909
90.83%

1,100

1,155

1,213

1,273

1,337

1,404

1,474

1,548

1,625

1,706

CASH FLOW (BEFORE TAXES)

Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

Net Operating Income


-Yrly. P & I
CASH FLOW (BEFORE TAXES)

1,100
17,450
-16,350

1,155
17,450
-16,295

1,213
17,450
-16,237

1,273
17,450
-16,177

1,337
17,450
-16,113

1,404
17,450
-16,046

1,474
17,450
-15,976

1,548
17,450
-15,902

1,625
17,450
-15,825

1,706
17,450
-15,744

Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

1,100
12,820
520
-12,240
25.00%
3,060

1,155
12,608
520
-11,973
25.00%
2,993

1,213
12,385
520
-11,692
25.00%
2,923

1,273
12,152
520
-11,399
25.00%
2,850

1,337
11,909
520
-11,092
25.00%
2,773

1,404
11,654
520
-10,771
25.00%
2,693

1,474
11,388
520
-10,434
25.00%
2,609

1,548
11,110
520
-10,082
25.00%
2,520

1,625
10,818
520
-9,713
25.00%
2,428

1,706
10,514
520
-9,327
25.00%
2,332

Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

287,000 282,370
282,370 277,527
4,630
4,843

277,527
272,462
5,065

272,462
267,164
5,298

267,164
261,623
5,541

261,623
255,827
5,796

255,827
249,765
6,062

249,765
243,425
6,341

243,425
236,793
6,632

236,793
229,857
6,936

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

2.00%
2.00%
410,000 418,200
418,200 426,564
8,200
8,364

2.00%
426,564
435,095
8,531

2.00%
435,095
443,797
8,702

2.00%
443,797
452,673
8,876

2.00%
452,673
461,727
9,053

2.00%
461,727
470,961
9,235

2.00%
470,961
480,380
9,419

2.00%
480,380
489,988
9,608

2.00%
489,988
499,788
9,800

ANNUAL OPERATING INCOME


Increase in income
5.00%
Expected Gross Income
less Vacancy/Collection losses 0.00%
EFFECTIVE GROSS INCOME
(EGI)
ANNUAL OPERATING EXPENSES
(Increase in expenses)
5.00%
Property Taxes
Insurance
Electricity
Gas
Oil
Water
Trash
Management
50.00%
Repairs/Maintenance
0.00%
Advertising
Telephone
Other
Other
Other
TOTAL OPERATING EXPENSES
Op. Expenses as %age of income

NET OPERATING INCOME


(NOI) excluding financing costs

TAX BENEFIT
Net Operating Income
-Annual Interest
-Annual Depreciation
Taxable Income
x Investor's Tax Bracket
TAX BENEFIT

25.00%

MORTGAGE PRINCIPAL REDUCTION


Start of Yr. Balance
-End of Yr. Balance
TOTAL PRINCIPAL REDUCTION

PROPERTY APPRECIATION

Yr. 1

(Increase)
2.00%
Start of Year Value
End of Year Value
TOTAL ANNUAL APPRECIATION

FINANCIAL ANALYSIS
RETURN ON INITIAL EQUITY (Assume Initial Equity = Down Payment + Capital Improvement)
Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

Cash Flow (Before Taxes)


Tax Benefit
Debt Reduction
Appreciation
$ RETURN ON INITIAL EQUITY

-16,350
3,060
4,630
8,200
-460

-16,295
2,993
4,843
8,364
-95

-16,237
2,923
5,065
8,531
282

-16,177
2,850
5,298
8,702
673

-16,113
2,773
5,541
8,876
1,077

-16,046
2,693
5,796
9,053
1,496

-15,976
2,609
6,062
9,235
1,929

-15,902
2,520
6,341
9,419
2,378

-15,825
2,428
6,632
9,608
2,843

-15,744
2,332
6,936
9,800
3,324

INITIAL EQUITY:
Down Payment
Capital Improvement
TOTAL INITIAL EQUITY

123,000 123,000
2,000
2,000
125,000 125,000

123,000
2,000
125,000

123,000
2,000
125,000

123,000
2,000
125,000

123,000
2,000
125,000

123,000
2,000
125,000

123,000
2,000
125,000

123,000
2,000
125,000

123,000
2,000
125,000

0.23%

0.54%

0.86%

1.20%

1.54%

1.90%

2.27%

2.66%

% RETURN ON INITIAL EQUITY

-0.37%

-0.08%

RETURN ON TOTAL EQUITY (Assume Total Equity = Start of Year Value - Start of Year Loan Balance)
Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

Cash Flow (Before Taxes)


Tax Benefit
Debt Reduction
Appreciation
$ RETURN ON TOTAL EQUITY

-16,350
3,060
4,630
8,200
-460

-16,295
2,993
4,843
8,364
-95

-16,237
2,923
5,065
8,531
282

-16,177
2,850
5,298
8,702
673

-16,113
2,773
5,541
8,876
1,077

-16,046
2,693
5,796
9,053
1,496

-15,976
2,609
6,062
9,235
1,929

-15,902
2,520
6,341
9,419
2,378

-15,825
2,428
6,632
9,608
2,843

-15,744
2,332
6,936
9,800
3,324

TOTAL EQUITY:
Beginning of Year Value inc. Cap. Imp.
Begining of Year Balance
TOTAL EQUITY

412,000 420,200
287,000 282,370
125,000 137,830

428,564
277,527
151,037

437,095
272,462
164,633

445,797
267,164
178,633

454,673
261,623
193,050

463,727
255,827
207,899

472,961
249,765
223,196

482,380
243,425
238,955

491,988
236,793
255,195

0.19%

0.41%

0.60%

0.77%

0.93%

1.07%

1.19%

1.30%

% RETURN ON TOTAL EQUITY

-0.37%

-0.07%

ESTIMATED SALE PROCEEDS (AFTER EXPENSES & TAXES)


Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

422,300 422,300
2,000
2,000
29,274
29,859
520
1,040
453,054 453,119

422,300
2,000
30,457
1,560
453,197

422,300
2,000
31,066
2,080
453,286

422,300
2,000
31,687
2,600
453,387

422,300
2,000
32,321
3,120
453,501

422,300
2,000
32,967
3,640
453,627

422,300
2,000
33,627
4,160
453,767

422,300
2,000
34,299
4,680
453,919

422,300
2,000
34,985
5,200
454,085

True CAPITAL GAIN


Sales Price
Non adjusted cost
True Gain or loss

418,200 426,564
453,574 454,159
-35,374 -27,595

435,095
454,757
-19,661

443,797
455,366
-11,569

452,673
455,987
-3,314

461,727
456,621
5,106

470,961
457,267
13,694

480,380
457,927
22,454

489,988
458,599
31,389

499,788
459,285
40,503

CAPITAL GAIN for tax purposes


Sales Price
- Adjusted Cost Basis
CAPITAL GAIN (tax purposes)

418,200 426,564
453,054 453,119
-34,854 -26,555

435,095
453,197
-18,101

443,797
453,286
-9,489

452,673
453,387
-714

461,727
453,501
8,226

470,961
453,627
17,334

480,380
453,767
26,614

489,988
453,919
36,069

499,788
454,085
45,703

-34,854

-18,101
-2,559

-9,489
-1,215

-714
153

8,226
1,546

17,334
2,964

26,614
4,408

36,069
5,878

45,703
7,375

470,961
32,967
249,765
188,228
2,964
185,264

480,380
33,627
243,425
203,329
4,408
198,921

489,988
34,299
236,793
218,896
5,878
213,017

499,788
34,985
229,857
234,946
7,375
227,571

ADJUSTED COST BASIS


Original Basis
+ Capital Improvements`
+ Sales Costs
- Accum. Depreciation
= ADJUSTED COST BASIS

CAPITAL GAIN TAX


Capital Gain for tax purposes
= Tax on Capital Gain

7.00%

-26,555
-3,879

EST. NET SALE PROCEEDS (after tax)


Sales Price
418,200 426,564
435,095
443,797 452,673 461,727
- Sales Costs
29,274
29,859
30,457
31,066
31,687
32,321
- Ending Loan Balance
282,370 277,527
272,462
267,164 261,623 255,827
= Proceeds Before Taxes
106,556 119,177
132,176
145,567 159,363 173,578
- Capital Gain Tax
0
-3,879
-2,559
-1,215
153
1,546
= EST NET SALE PROCEEDS A/T
106,556 123,056
134,736
146,782 159,210 172,032
You must hold the property for a year and a day to qualify for long term capital gains tax treatment.
DEBT SERVICE COVERAGE RATIO (DSC)

Net Operating Income


Debt Service (Yr. P & I)
DSC

Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

1,100
17,450
0.06

1,155
17,450
0.07

1,213
17,450
0.07

1,273
17,450
0.07

1,337
17,450
0.08

1,404
17,450
0.08

1,474
17,450
0.08

1,548
17,450
0.09

1,625
17,450
0.09

1,706
17,450
0.10

(Page 7 of 7)
This report is based on certain assumptions.The projections are estimates only
Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.
Return on equity includes appreciation, principal reduction and tax benefit.

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