5071

CELEBRITY CIR, LAS VEGAS, 89119 4 bedroom 3 F bath 1678 SF home built in 1982 $ 92,900 Asking price
Notes: 1 2 3

All-cash purchase
$ 1,075 $ 315 $ 761 $ 9,126 $ 92,900 9.8% $ 162,614 $ 69,714 14.0% Rent (see page 2 for comparables) Expenses (see page 2 for detail) Monthly net operating income Yearly net income Asking price (Investment) Capitalization Rate = net income / asking price Resale value in year 10 (net of 8% liquidation costs) Profit from sale in year 10 Internal Rate of Return

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30-year fixed $ 92,900 Asking price $ 74,320 Maximum loan $ 18,580 Down payment $ 1,075 $ 315 $ 761 $ 410 $ 350 $ 85 $ 435 $ 5,224 $ 18,580 28.1% $ 101,976 37.2%

Financed purchase

15-year fixed $ 92,900 $ 74,320 $ 18,580 4.75% $ 1,075 $ 315 $ 761 $ 578 $ 182 $ 284 $ 466 $ 5,596 $ 18,580 30.1% $ 131,916 40.4%
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5.25% Investment loan interest rate Rent Expenses Monthly net income Payment Monthly cashflow Principal amortization in payment Cashflow plus amortization Yearly cashflow plus amortization Down payment (Investment) Cash-On-Cash Return = cashflow / down payment Cash at Sale in year 10 (profit plus amortization) Internal Rate of Return
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Notes: 1

Calculations $ 1,075 Rent $ 80 $ 55 $ - $ 65 $ - $ 200

Net Operating Income Detail

Terms

Cash Operating Expenses

15 16 17 18 19

Property Tax Homeowners Insurance Homeowners Association Fees Property Management Fees (% of Gross Rent) Other Expenses Monthly Cash Expenses

1.0% 0.65% varies 6.0% 18.6% 6.5% 4.2% 10.7% 29.3% 70.7% Resale Date
8/24/11 8/19/11 8/12/11 7/15/11 7/6/11 6/29/11 6/28/11

Reserve Expenses
20 21

$ 70 Maintenance and Replacement Reserves $ 45 Vacancy and Collection Loss $ 115 Monthly Reserve Expenses $ 315 Total Expenses

$ 761 Net Operating Income

Comparable Resales
2085 WAGONWHEEL AV -- 3 bed 2 bath 1393 SF -- 1971 List: $70800 5365 STIRRUP ST -- 3 bed 2 bath 1393 SF -- 1970 List: $87888 5350 SPENCER ST -- 3 bed 2 bath 1418 SF -- 1973 List: $99000 2317 E RENO AV -- 3 bed 2 bath 1347 SF -- 1970 List: $97999 1978 WHIPPLETREE AVENUE -- 3 bed 2 bath 1640 SF -- 1973 List: $84900 5554 CHESTNUT ST -- 3 bed 2 bath 1418 SF -- 1973 List: $79900 1751 SANDALWOOD LN -- 3 bed 2 bath 1576 SF -- 1978 List: $111500

Amount
$ 68,000 $ 85,000 $ 99,500 $ 100,000 $ 87,000 $ 75,000 $ 107,000

Comparable Rentals
2210 E RENO AV -- 3 bed 2 bath 1645 SF -- 1979 List: $1200 5582 CLYDESDALE ST -- 4 bed 3 bath 1696 SF -- 1969 List: $1095 2358 FLORENCE AV -- 4 bed 2 bath 1686 SF -- 1970 List: $1150 5536 OXBOW ST -- 3 bed 2 bath 1725 SF -- 1973 List: $1095 2016 WAGONWHEEL AV -- 4 bed 2 bath 1852 SF -- 1972 List: $1185 5401 LINDERO PL -- 3 bed 2 bath 1536 SF -- 1978 List: $1150 5255 DICKENS DR -- 2 bed 2 bath 1632 SF -- 1984 List: $1250

Lease Date

Amount

6/1/11 $ 1,200 6/3/11 $ 1,095 3/19/11 $ 1,150 3/17/11 $ 1,000 11/6/10 $ 1,185 7/25/11 $ 1,150 9/5/11 $ 1,250

General Disclaimer
This report represents the considered opinion of Ideal Home Brokers. We make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates may not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. Ideal Home Brokers Property Offering Report
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Projected 10-year appreciation to near rental parity with liquidation resale

$250,000 Rental Parity
2.5% annual rent growth

Resale Value

$229,520

$200,000

$179,301 $150,000 $92,900

$176,755
Undervaluagon

Resale near rental parity in year 10

$100,000

3 year trough to breakeven

5 years of double-digit appreciagon

$50,000

$- 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Financing Terms and Cash-On-Cash Returns

45.0% 40.0% Cash-On-Cash Return 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0%

lower interest rates generate higher returns

lower down payments generate higher returns

Interest Ra te
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Notes: Gross Rent is estimated from comparable rentals or taken from actual rent rolls. 1 2 3
Summary of expenses from page 2 Net Operating Income is the rental income minus the cash expenses. This figure is independent of taxes or financing which vary considerably from deal to deal. Many rental properties are purchased without debt, and the Net Operating Income is necessary to compute the Capitalization Rate. The capitalization (cap) rate is the (yearly) Net Operating Income divided by the purchase price. It is the simplest measure of an investment's financial performance, and it provides a convenient comparison to competing investment alternatives. A cap rate is like an interest rate on a checking account, a mutual fund return, or a bond yield. The cap rate is inversely related to price; in other words, high cap rates are synonymous with low prices and visa versa. The cap rate an investor will accept varies from person to person. There is no single appropriate rate to apply to value. Instead, we show a range of values at different cap rates to show the current investment return someone can expect from this property. The resale value at in year 10 assumes prices appreciate strongly after the supply problems are resolved. (see page 3). The Internal Rate of Return evaluates the timing and the amount of each source of income and calculates a rate which would balance these various sources of income with the initial investment. IRR is the best method for calculating the returns on investments with variable income. Maximum loan based on lender limitations or available cashflow. Generally smaller for 15-year amortization. The down payment reflects the minimum up-front investment required based on financing limitations. Mortgage interest rates vary based on amortization schedule. The quicker the loan amortizes, the lower the interest rate. The monthly payment is the based on the largest loan a lender offers that still provides for positive cashflow The monthly cashflow shows the amount left over after all payments and reserves have been met. This is the calculated principal amortization in the first payment. This amount increases in subsequent payments. The actual monthly gain includes both left-over cashflow and amortization in the loan. The Cash-On-Cash Return is similar to a capitalization rate in that it shows a return on investment, but it is measured by comparing the Total Profit and Loss after Expenses, Debt and Taxes and compares that to the cash investment. This is the important rate of return for investors who are not purchasing with all cash. As long as debt is less expensive than the cap rate, the cash-on-cash returns can be magnified by increasing debt. This is an appropriate use of leverage to increase investment returns. This is the property tax amount set by the local jurisdiction. Estimated homeowners insurance. Homeowners association dues from property investigation. Property management fees vary, but 8%-10% of the monthly rent is a common fee. Monthly cash expenses are the actual outlays of cash each month to support the property. Estimated maintenance and replacement reserves. These are higher in single-family detached homes and in older properties. Vacancy and Collection Loss is an allowance for tenant turnover.

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