Parqueo Hotel Iguana Azul, santa cruz 50303, CR

Parqueo Hotel Iguana Azul, santa cruz, 50303

Commercial (Land):

Investment strategy: Rental Property

Purchase Price$ 6,000,000

Rent$ 148,300/mo

Monthly Cash Flow$ 1,249

Cash on Cash Return10.61 %

Financial Analysis

Cash on Cash Return	10.61 %
Internal Rate of Return (IRR)	13.31 %
Capitalization Rate	9.27 %
Gross Rent Multiplier (GRM)	3.99
Debt-coverage Ratio (DCR)	1.92
Operating Expense Ratio (OER)	50.67 %
After Repair Value	$ 7,100,000
Profit/Equity From Rehab	$ 231,000

Financial Breakdown

Purchase Price	$ 6,000,000
Purchase Costs	$ 419,000
Repair/Construction Costs	$ 450,000
Total Capital Needed Total Capital Needed Includes all projects costs (except selling costs). Total Capital Needed Includes all projects costs (except selling costs).	$ 6,869,000
Financing	$ 3,900,000
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 2,969,000
Cash at Closing Cash at Closing This number includes down payment and loan points. Cash at Closing This number includes down payment and loan points.	$ 2,139,000
Cash During Rehab Cash During Rehab Shows the cash amount remaining to fund the purchase and rehab/construction. Cash During Rehab Shows the cash amount remaining to fund the purchase and rehab/construction.	$ 830,000

Operating Analysis

Rent	$ 148,300/mo
Gross Operating Income (GOI)	$ 1,334,700
Total Expenses	$ 676,309
Net Operating Income (NOI)	$ 658,391
Annual Debt Service	$ 343,402
Cash Flow Before Taxes (CFBT)	$ 14,989
Income Tax Liability	$ -18,877
Cash Flow After Taxes (CFAT)	$ 33,866

Purchase Price	$ 6,000,000
Address	Parqueo Hotel Iguana Azul , santa cruz, 50303, CR
Type	Commercial
Category	Land

Unit	Rent
Cabana #01 Existing Waterfront	$ 18,250/mo
Cabana #02 Existing Waterfront	$ 18,250/mo
Cabana #03 Existing Waterfront	$ 18,250/mo
Cabana #04 Existing Garden	$ 12,000/mo
Cabana #05 Existing Gaeden	$ 12,000/mo
Cabana #06 Existing Garden	$ 12,000/mo
Cabana #07 New 1,200 sf	$ 18,250/mo
Cabana #08 New 1,200 sf	$ 18,250/mo
Cabana #10 New 1,200 sf	$ 18,250/mo
Club Membership	$ 2,800/mo

Annual Property Operating Data

Incomes		% of GOI
Gross Scheduled Income Gross Scheduled Income (GSI) Represents the total of monthly rents for the particular property, including the potential rents from vacant units and uncollectable rents. Gross Scheduled Income (GSI) Represents the total of monthly rents for the particular property, including the potential rents from vacant units and uncollectable rents.	$ 1,779,600
Food & Beverage Income	$ 0
Total Gross Income	$ 1,779,600
Vacancy loss Vacancy and Credit Loss Part of the potential rental income that is lost because of unoccupied units or uncollectable rent from tenants. Vacancy and Credit Loss Part of the potential rental income that is lost because of unoccupied units or uncollectable rent from tenants.	$ 444,900
Gross Operating Income Gross Operating Income (GOI) An actual income which is expected to be collected in the property. Gross Operating Income (GOI) An actual income which is expected to be collected in the property.	$ 1,334,700	100.00 %
Expenses Operating Expenses Expenses necessary for maintaining the property and ensuring its continued ability to produce income (doesn't include mortgage payments or depreciation). Operating Expenses Expenses necessary for maintaining the property and ensuring its continued ability to produce income (doesn't include mortgage payments or depreciation).
Real Estate Taxes	$ 16,000	1.20 %
Property Insurance	$ 40,041	3.00 %
Professional Management	$ 53,388	4.00 %
Asset Management	$ 13,347	1.00 %
Property Staff & Mgmt	$ 266,940	20.00 %
Utilities	$ 200,205	15.00 %
Repairs & Maintenance	$ 28,000	2.10 %
Landscaping & Interiors	$ 5,000	0.37 %
Reserves	$ 53,388	4.00 %
Total Expenses	$ 676,309	50.67 %
Net Operating Income Net Operating Income (NOI) Important measurement calculated as gross operating income minus operating expenses. Net Operating Income (NOI) Important measurement calculated as gross operating income minus operating expenses.	$ 658,391	49.33 %

Cash Flow (Year 1)

Net Operating Income	$ 658,391	49.33 %
Annual Debt Service	$ 343,402	25.73 %
Cash Flow Before Taxes (CFBT) Cash Flow All the inflows and outflows of cash for a certain property (including mortgage payments). We can calculate cash flow before taxes (CFBT) or cash flow after taxes (CFAT) which is CFBT minus any tax liability arising from the operation of the property. Cash Flow All the inflows and outflows of cash for a certain property (including mortgage payments). We can calculate cash flow before taxes (CFBT) or cash flow after taxes (CFAT) which is CFBT minus any tax liability arising from the operation of the property.	$ 14,989	1.12 %
Income Tax Liability	$ -18,877	-1.41 %
Cash Flow After Taxes (CFAT) Cash Flow All the inflows and outflows of cash (including mortgage payments). We can calculate cash flow before taxes (CFBT) or cash flow after taxes (CFAT) which is CFBT minus any tax liability arising from the operation of the property. Cash Flow All the inflows and outflows of cash (including mortgage payments). We can calculate cash flow before taxes (CFBT) or cash flow after taxes (CFAT) which is CFBT minus any tax liability arising from the operation of the property.	$ 33,866	2.54 %

Operating Ratios

Operating Expense Ratio Operating Expense Ratio Ratio of the operating expenses to the gross operating income (GOI). Operating Expense Ratio Ratio of the operating expenses to the gross operating income (GOI).	50.67 %
Break-Even Ratio Break-Even Ratio (BER) Another benchmark used by mortgage lenders, estimating how vulnerable is a certain property to defaulting on its mortgage if part of the rental income is declined. Most of the lenders are looking for BER of 85% or less. Break-Even Ratio (BER) Another benchmark used by mortgage lenders, estimating how vulnerable is a certain property to defaulting on its mortgage if part of the rental income is declined. Most of the lenders are looking for BER of 85% or less.	76.40 %

Financial Measures

Net Present Value Net Present Value (NPV) Probably the best measure of any investment thanks to its complexity; taking into account all future cash flows including the selling price, and it converts all these amounts to their present values using discount rate required by the investor. More information and an example on the blog. Net Present Value (NPV) Probably the best measure of any investment thanks to its complexity; taking into account all future cash flows including the selling price, and it converts all these amounts to their present values using discount rate required by the investor. More information and an example on the blog.	$ 2,772,749
Internal Rate of Return Internal Rate of Return (IRR) Rate which an investment will return over the estimated period of ownership. It is in fact the discount rate that produces NPV of zero. Internal Rate of Return (IRR) Rate which an investment will return over the estimated period of ownership. It is in fact the discount rate that produces NPV of zero.	13.31 %
Profitability Index Profitability Index Similar to NPV, also calculates with the present values of future cash flows and discount rate. It shows whether the present value of the cash flows is worth the initial investment. Good investment should be above 1.0 Profitability Index Similar to NPV, also calculates with the present values of future cash flows and discount rate. It shows whether the present value of the cash flows is worth the initial investment. Good investment should be above 1.0	1.93
Annual Depreciation	$ 123,077

Holding period of 10 years and discount rate of 5.00% were used for calculation of NPV and IRR. The rest of the financial measures are for the 1st year only and therefore don't provide such an exact information.

Investment Return Ratios

Cash on Cash Return Cash on Cash Return Ratio between annual cash flow before taxes and the total initial investment, expressed as a percentage. It does not take in account the future value of money. Cash on Cash Return Ratio between annual cash flow before taxes and the total initial investment, expressed as a percentage. It does not take in account the future value of money.	10.61 %
Return on Investment Return on Investment Very similar to Cash on Cash Return, but also takes in account appreciation of the property in the first year. Return on Investment Very similar to Cash on Cash Return, but also takes in account appreciation of the property in the first year.	16.67 %
Capitalization Rate Capitalization Rate Calculated as ratio of the net operating income and the value of the property. Capitalization Rate Calculated as ratio of the net operating income and the value of the property.	9.27 %
Gross Rental Yield Gross Rental Yield Used for a particular property or also as a market indicator when using median values of rent and house prices - counted from gross scheduled rent and initial investment. Gross Rental Yield Used for a particular property or also as a market indicator when using median values of rent and house prices - counted from gross scheduled rent and initial investment.	29.66 %
Gross Rent Multiplier Gross Rent Multiplier (GRM) Counted as a ratio of market value of the property and gross scheduled income. Gross Rent Multiplier (GRM) Counted as a ratio of market value of the property and gross scheduled income.	3.99

Financing		% of ARV
Down Payment	$ 2,100,000	29.58 %
Costa Rica Loan	$ 3,900,000	54.93 %
Loan to Value Ratio Loan to Value Ratio Shows sum of all purchase and rehab loans divided by purchase price. Loan to Value Ratio Shows sum of all purchase and rehab loans divided by purchase price.		65.00 %
Loan to Cost Ratio Loan to Cost Ratio Shows sum of all purchase and rehab loans to construction cost (purchase price + repairs). Loan to Cost Ratio Shows sum of all purchase and rehab loans to construction cost (purchase price + repairs).		60.47 %
Debt Coverage Ratio		1.92

Costa Rica Loan Financing of: Purchase price ($ 6,000,000)
Type	Amortized
Loan Amount	$ 3,900,000
Down payment (35%)	$ 2,100,000
Amortization	30 years
Balloon Payment	Year 10
Interest Rate	8.00 %
Monthly Payment	$ 28,616.82

This chart shows the process of accumulation of investor's equity. There is some equity created right at the beginning with the rehab/construction and later investor's equity is rising by paying off the principal of the loan and also by appreciation over the years. All the green parts is the cummulative equity belonging to the investor and the red part belongs to the lender.

Year	0	1	2	3	4	5	6	7	8	9	10
Operational Analysis
Gross Scheduled Income	0	1,779,600	1,850,784	1,924,815	2,001,808	2,081,880	2,165,156	2,251,762	2,341,832	2,435,505	2,532,926
Vacancy Loss	0	444,900	462,696	481,204	500,452	520,470	541,289	562,940	585,458	608,876	633,231
Gross Operating Income	0	1,334,700	1,388,088	1,443,612	1,501,356	1,561,410	1,623,867	1,688,821	1,756,374	1,826,629	1,899,694
Expenses	0	676,309	689,835	703,632	717,705	732,059	746,700	761,634	776,866	792,404	808,252
Net Operating Income	0	658,391	698,253	739,980	783,651	829,352	877,167	927,188	979,508	1,034,225	1,091,442
Loan Payment	0	343,402	343,402	343,402	343,402	343,402	343,402	343,402	343,402	343,402	343,402
Payment Interest Part	0	310,823	308,119	305,190	302,019	298,584	294,864	290,835	286,472	281,747	276,630
Payment Principal Part	0	32,579	35,283	38,212	41,383	44,818	48,538	52,567	56,930	61,655	3,488,035
Cash Flow
Repairs/Construction	450,000	300,000	720,000	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-2,969,000	14,989	-365,149	396,578	440,250	485,950	533,765	583,786	636,106	690,824	748,041
Depreciation	0	123,077	123,077	123,077	123,077	123,077	123,077	123,077	123,077	123,077	123,077
Taxes	0	-18,877	-113,236	77,928	89,639	101,923	114,807	128,319	142,490	157,350	172,934
Cash Flow After Taxes	-2,969,000	33,866	-251,913	318,650	350,611	384,027	418,959	455,467	493,616	533,473	575,107

Note: All amounts in the table above are in $

Resale Price Evaluation Methods

The property is sold after 10 years. Below is the resale price calculated using different methods.

Appreciation (3.00%)	$ 9,541,806
Cap Rate (9.27%) & NOI	$ 11,773,920
Gross Rent Multiplier	$ 10,106,374

Sale Proceeds

Projected Selling Price	$ 9,541,806
Costs of Sale (6.00%)	$ 572,508
1. Loan Balance Payoff	$ 3,421,263
Net Sale Proceeds Before Tax	$ 5,548,034

In the resale analysis we do not include any calculation for taxes that might be owed on sale of the property. The tax laws for the resale are rather complex and subjected to frequent changes.

Net Assets and Yield

Net Assets
Sale Proceeds Before Tax	$ 5,548,034
Investor Cash Outlay	$ 2,969,000
Net Assets	$ 2,579,034
Average Yield
Annual Net Assets	$ 257,903
Average Cash Flow (After Taxes)	$ 273,676
Average Annual Gain (After Taxes)	$ 531,579
Average Annual Yield (After Taxes)	8.86 %

This charts shows Net Present Value (NPV) when property is sold in various years, i.e. when sold in 5th year, the NPV is calculated from 5 years of Cash Flow (including the selling price) and this NPV is displayed in year 5. Optimal holding period can be estimated, using this method - when NPV is the highest. Please note that appreciation growth can change these numbers greatly. It sometimes makes sense to sell the property even before the end of the mortgage term.

Property Report: Parqueo Hotel Iguana Azul, santa cruz RENTAL

Property Report :

Parqueo Hotel Iguana Azul, santa cruz, 50303

Executive Summary