111 Valiant Ridge Trl, Magnolia TX 77354

111 Valiant Ridge Trl, Magnolia, TX 77354

Singlefamily: 4 bedrooms , 2.5 bathrooms

Year built: 2020, Size: 2135 SF

Investment strategy: Rental Property

Purchase Price$ 320,000

Rent$ 2,550/mo

Monthly Cash Flow$ -120

Cash on Cash Return-1.69 %

Financial Analysis

Cash on Cash Return	-1.69 %
Internal Rate of Return (IRR)	20.39 %
Capitalization Rate	5.39 %
Gross Rent Multiplier (GRM)	10.46
Debt-coverage Ratio (DCR)	0.92
Operating Expense Ratio (OER)	40.68 %

Financial Breakdown

Purchase Price	$ 320,000
Purchase Costs	$ 3,395
Repair/Construction Costs	$ 1,500
Total Capital Needed Total Capital Needed Includes all projects costs (except selling costs). Total Capital Needed Includes all projects costs (except selling costs).	$ 324,895
Financing	$ 240,000
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 84,895
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.	$ 83,000
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.	$ 1,895

Operating Analysis

Rent	$ 2,550/mo
Gross Operating Income (GOI)	$ 29,070
Total Expenses	$ 11,826
Net Operating Income (NOI)	$ 17,244
Annual Debt Service	$ 18,680
Cash Flow Before Taxes (CFBT)	$ -1,436
Income Tax Liability	$ -2,047
Cash Flow After Taxes (CFAT)	$ 611

Have you been searching for an open floor-plan with a 3 car garage? If the answer is yes, then you've come to the right place! As you enter the home, appreciate the wood looking floors throughout the main living areas, open spaces, split floor-plan and an abundance of cabinetry. The kitchen offers an abundance of counter space, granite countertops, modern cabinetry, subway tile backsplash, huge kitchen island with counter height seating and more! The kitchen is open to the dining area and living room. Just off the main living area you will mind the spacious primary bedroom tucked away. Just off the primary is an en-suite bathroom with separate soaker tub and shower plus a great closet! You will find bedrooms 2-4 are a great size and split throughout the home. Step outside onto your extended covered patio and enjoy the peace and quiet. Neighborhood amenities include a lake, a year-round splash pad and walking trails. Schedule your viewing today!

Purchase Price	$ 320,000
Address	111 Valiant Ridge Trl , Magnolia, 77354, TX
MLS^® #	13031209
Listing Agent	Jessie Githens
Listing Broker	CB&A, Realtors
Year Built	2020
Type	Singlefamily
Size	2135 SF
Bedrooms	4
Bathrooms	2.5

Property History

Date	Price	Change	Event
8/25/2020

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.	$ 30,600
Total Gross Income	$ 30,600
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.	$ 1,530
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.	$ 29,070	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).
Repairs	$ 1,000	3.44 %
Association fees	$ 672	2.31 %
Property tax	$ 8,054	27.71 %
Insurance	$ 2,100	7.22 %
Total Expenses	$ 11,826	40.68 %
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.	$ 17,244	59.32 %

Cash Flow (Year 1)

Net Operating Income	$ 17,244	59.32 %
Annual Debt Service	$ 18,680	64.26 %
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.	$ -1,436	-4.94 %
Income Tax Liability	$ -2,047	-7.04 %
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.	$ 611	2.10 %

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).	40.68 %
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.	104.94 %

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.	$ 104,006
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.	20.39 %
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	2.23
Annual Depreciation	$ 9,309

Holding period of 6 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.	-1.69 %
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.	24.69 %
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.	5.39 %
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.	9.56 %
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.	10.46

Financing
Down Payment		$ 80,000
1. Loan		$ 240,000
2. Loan (Refinance)		$ 231,780
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.		75.00 %
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).		74.65 %
Debt Coverage Ratio		0.92

1. Loan Financing of: Purchase price ($ 320,000)
Type	Amortized
Loan Amount	$ 240,000
Down payment (25%)	$ 80,000
Amortization	30 years
Balloon Payment	Year 3
Interest Rate	6.75 %
Monthly Payment	$ 1,556.64

2. Loan (Refinance) Financing of: Refinance ($ 320,000)
Type	Amortized
Loan Amount	$ 231,780
Amortization	30 years
Interest Rate	4.50 %
Monthly Payment	$ 1,174.39

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
Operational Analysis
Gross Scheduled Income	0	30,600	31,518	32,464	33,437	34,441	35,474
Vacancy Loss	0	1,530	1,576	1,623	1,672	1,722	1,774
Gross Operating Income	0	29,070	29,942	30,840	31,766	32,719	33,700
Expenses	0	11,826	12,063	12,304	12,550	12,801	13,057
Net Operating Income	0	17,244	17,880	18,537	19,216	19,918	20,643
1. Loan Payment	0	18,680	18,680	18,680	0	0	0
Payment Interest Part	0	16,122	15,944	15,753	0	0	0
Payment Principal Part	0	2,558	2,736	234,706	0	0	0
2. Loan Payment	0	0	0	0	14,093	14,093	14,093
Payment Interest Part	0	0	0	0	10,354	10,182	10,002
Payment Principal Part	0	0	0	0	3,739	3,911	4,091
Total Debt Service	0	18,680	18,680	18,680	14,093	14,093	14,093
Cash Flow
Repairs/Construction	1,500	0	0	0	0	0	0
Cash Flow Before Taxes	-84,895	-1,436	-800	-143	5,123	5,825	6,550
Depreciation	0	9,309	9,309	9,309	9,309	9,309	9,309
Taxes	0	-2,047	-1,843	-1,631	-112	107	333
Cash Flow After Taxes	-84,895	611	1,043	1,488	5,235	5,718	6,217

Note: All amounts in the table above are in $

Resale Price Evaluation Methods

The property is sold after 6 years. Below is the resale price calculated using different methods.

Appreciation (7.00%)	$ 480,234
Cap Rate (5.39%) & NOI	$ 382,991
Gross Rent Multiplier	$ 371,056

Sale Proceeds

Projected Selling Price	$ 480,234
Costs of Sale (6.00%)	$ 28,814
2. Loan Balance Payoff	$ 220,039
Net Sale Proceeds Before Tax	$ 231,381

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	$ 231,381
Investor Cash Outlay	$ 84,895
Net Assets	$ 146,486
Average Yield
Annual Net Assets	$ 24,414
Average Cash Flow (After Taxes)	$ 2,349
Average Annual Gain (After Taxes)	$ 26,764
Average Annual Yield (After Taxes)	8.36 %

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: 111 Valiant Ridge Trl, Magnolia RENTAL

Property Report :

111 Valiant Ridge Trl, Magnolia, TX 77354

Executive Summary