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City of

Livermore

Sun Consulting Firm


For Residential Apartments

Nasrin Hashimi
Gary Kwan
Shirley Lau
Po-hsun (Sam) Chiang
Mikiko Naomi
Albert Liu
History of
Livermore
 Livermore City is founded in  Location, location, location.
the year of 1969
 Apartment buildings are a very
 Livermore is known
flexible real estate investment
California’s oldest wine region
and framed by award-winning  Apartment buildings are
wineries, farm lands and mortgaged based on the net-
ranches income performance of the
property
 Livermore has a population of
80723 and located on east side  Everyone needs a place to live
of San Francisco Bay Area  Residential apartment creates a
 Why buy residential apartment long term income
in City of Livermore?
Livermore
Innovations
 Supply of rental units will soon to become scarce due to
conversions
 Brookeside Apartments, 154 unit complex,
 Conversions show much support from both property owners
and former renters who have managed to purchase the units.
 Livermore is a solid investment
 Livermore has more industry, jobs, culture, and a well-
planned development
 Future Expectations
Apartment Income in
Livermore
 Gross Income = Pre-tax net sales minus cost of sales
 Operating Expense = An expense arising in the normal course of running
a business
 Net Operating Income= Income after deducting for operating expenses
but before deducting for income taxes and interest.

~Cap Rate~
 The cap rate is the assumed rate of return on an investment in real estate.

Current Annual Net Income


 Cap Rate =
Property Price

 From an income standpoint, the higher the cap rate, the better deal.
Which is the Livermore Fremont San
Leandro
better deal? Price $3,685,000 $3,065,000 $2,490,000
 Example:
b) Six unit apartment project sold Total 60,027 sq 44,630.4 32,517.6
for $300,000. The net income is property sq sq
$24,000. size
c) Six unit apartment project sold
for $280,000. The net income is Ave unit $167,500 $153,250 $155,625
$22,000. price
 Calculate Cap Rate: Gross $285,780 N/A $220,970
• $24,000 / $300,000 = .08 or 8% income
• $22,000 / $280,000 = .786 or Operating $69,748 N/A $83,014
7.86% expense
 Conclusion: Net $216,032 $133.118 $131,754
Example a) has bigger cap rate. Operating
Therefore, a) is the better deal. Income
Cap Rate 5.53% 4.34% 5.29%
Apartments’ Appreciation Value
 Appreciation is the increase in value of a property over time
 Factors include inflation, supply and demand, capital
improvements
 Investors purchase residential apartments for cash flow and
capital appreciation
 Inflation causes appreciation
 residential apartments are good investment in Livermore
 Cost-effective improvements cause appreciation
 Supply and demand
 Livermore has high demand for housing
 Livermore should enjoy above average appreciation rates for
real estate
Appreciati
on Value

No. Bedrooms Nov '07-Jan '08 Nov '02-Jan '03 Compare to Nov
'02-Jan '03

Fremont
4 bedrooms $818,806 $549,070 +49.1%

Livermore
4 bedrooms $609,867 $593,914 +2.7%

San Leandro
4 bedrooms $525,659 $471,033 +11.6%
CASH FLOW MODEL
(Long Term)
 Fremont (Carol Apartment)
NOI $133,118
Cap Rate 4.3%

 Livermore (Franciscan Court


Apartment)
NOI $216,032
Cap Rate 5.53%

 San Leandro (Pacific


Apartment)
NOI $131,754
Cap Rate 5.29%

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