Franklin Town House Package: 11204 W Forest Home Ave, Franklin WI 53132

11204 W Forest Home Ave, Franklin, WI 53132

Multifamily:

Investment strategy: Rental Property

Purchase Price$ 995,000

Rent$ 9,600/mo

Monthly Cash Flow$ 727

Cash on Cash Return4.32 %

Financial Analysis

Cash on Cash Return	4.32 %
Internal Rate of Return (IRR)	12.69 %
Capitalization Rate	8.32 %
Gross Rent Multiplier (GRM)	8.64
Debt-coverage Ratio (DCR)	1.12
Operating Expense Ratio (OER)	26.68 %

Financial Breakdown

Purchase Price	$ 995,000
Purchase Costs	$ 3,000
Repair/Construction Costs	$ 0
Total Capital Needed Total Capital Needed Includes all projects costs (except selling costs). Total Capital Needed Includes all projects costs (except selling costs).	$ 998,000
Financing	$ 796,000
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 202,000
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.	$ 199,000
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.	$ 3,000

Operating Analysis

Rent	$ 9,600/mo
Gross Operating Income (GOI)	$ 112,896
Total Expenses	$ 30,120
Net Operating Income (NOI)	$ 82,776
Annual Debt Service	$ 74,057
Cash Flow Before Taxes (CFBT)	$ 8,719
Income Tax Liability	$ -322
Cash Flow After Taxes (CFAT)	$ 9,041

Purchase Price	$ 995,000
Address	11204 W Forest Home Ave , Franklin, 53132, WI
Type	Multifamily
Number of Units	6

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.	$ 115,200
Total Gross Income	$ 115,200
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.	$ 2,304
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.	$ 112,896	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).
Property manager	$ 6,774	6.00 %
Insurance	$ 4,200	3.72 %
Property tax	$ 19,147	16.96 %
Total Expenses	$ 30,120	26.68 %
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.	$ 82,776	73.32 %

Cash Flow (Year 1)

Net Operating Income	$ 82,776	73.32 %
Annual Debt Service	$ 74,057	65.60 %
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.	$ 8,719	7.72 %
Income Tax Liability	$ -322	-0.29 %
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.	$ 9,041	8.01 %

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).	26.68 %
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.	92.28 %

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.	$ 700,241
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.	12.69 %
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	4.47
Annual Depreciation	$ 28,945

Holding period of 30 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.	4.32 %
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.	14.17 %
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.	8.32 %
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.	11.58 %
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.	8.64

Financing
Down Payment		$ 199,000
Commercial		$ 796,000
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.		80.00 %
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).		80.00 %
Debt Coverage Ratio		1.12

Commercial Financing of: Purchase price ($ 995,000)
Type	Amortized
Loan Amount	$ 796,000
Down payment (20%)	$ 199,000
Amortization	20 years
Interest Rate	7.00 %
Monthly Payment	$ 6,171.38

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	11	12	13	14	15	16	17	18	19	20	21	22	23	24	25	26	27	28	29	30
Operational Analysis
Gross Scheduled Income	0	115,200	117,504	119,854	122,251	124,696	127,190	129,734	132,329	134,975	137,675	140,428	143,237	146,101	149,023	152,004	155,044	158,145	161,308	164,534	167,825	171,181	174,605	178,097	181,659	185,292	188,998	192,778	196,633	200,566	204,577
Vacancy Loss	0	2,304	2,350	2,397	2,445	2,494	2,544	2,595	2,647	2,700	2,753	2,809	2,865	2,922	2,980	3,040	3,101	3,163	3,226	3,291	3,356	3,424	3,492	3,562	3,633	3,706	3,780	3,856	3,933	4,011	4,092
Gross Operating Income	0	112,896	115,154	117,457	119,806	122,202	124,646	127,139	129,682	132,276	134,921	137,620	140,372	143,179	146,043	148,964	151,943	154,982	158,082	161,243	164,468	167,758	171,113	174,535	178,026	181,586	185,218	188,922	192,701	196,555	200,486
Expenses	0	30,120	30,723	31,337	31,964	32,603	33,255	33,921	34,599	35,291	35,997	36,717	37,451	38,200	38,964	39,743	40,538	41,349	42,176	43,019	43,880	44,757	45,653	46,566	47,497	48,447	49,416	50,404	51,412	52,440	53,489
Net Operating Income	0	82,776	84,431	86,120	87,842	89,599	91,391	93,219	95,083	96,985	98,924	100,903	102,921	104,979	107,079	109,221	111,405	113,633	115,906	118,224	120,588	123,000	125,460	127,969	130,529	133,139	135,802	138,518	141,288	144,114	146,997
Loan Payment	0	74,057	74,057	74,057	74,057	74,057	74,057	74,057	74,057	74,057	74,057	74,057	74,057	74,057	74,057	74,057	74,057	74,057	74,057	74,057	74,057	0	0	0	0	0	0	0	0	0	0
Payment Interest Part	0	55,120	53,751	52,283	50,709	49,022	47,212	45,271	43,190	40,959	38,566	36,001	33,250	30,300	27,137	23,745	20,108	16,208	12,026	7,542	2,733	0	0	0	0	0	0	0	0	0	0
Payment Principal Part	0	18,936	20,305	21,773	23,347	25,035	26,845	28,785	30,866	33,098	35,490	38,056	40,807	43,757	46,920	50,312	53,949	57,849	62,031	66,515	71,323	0	0	0	0	0	0	0	0	0	0
Cash Flow
Repairs/Construction	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-202,000	8,719	10,375	12,063	13,786	15,542	17,334	19,162	21,027	22,928	24,868	26,846	28,864	30,923	33,022	35,164	37,348	39,577	41,849	44,167	46,532	123,000	125,460	127,969	130,529	133,139	135,802	138,518	141,288	144,114	146,997
Depreciation	0	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945	28,945
Taxes	0	-322	434	1,223	2,047	2,908	3,809	4,751	5,737	6,770	7,853	8,989	10,182	11,434	12,749	14,133	15,588	17,120	18,734	20,434	22,228	23,514	24,129	24,756	25,396	26,049	26,714	27,393	28,086	28,792	29,513
Cash Flow After Taxes	-202,000	9,041	9,941	10,840	11,739	12,634	13,526	14,412	15,290	16,158	17,015	17,857	18,683	19,489	20,273	21,031	21,760	22,456	23,115	23,733	24,304	99,486	101,331	103,213	105,133	107,091	109,088	111,125	113,203	115,322	117,484

Note: All amounts in the table above are in $

Resale Price Evaluation Methods

The property is sold after 30 years. Below is the resale price calculated using different methods.

Appreciation (2.00%)	$ 1,802,305
Cap Rate (8.32%) & NOI	$ 1,766,785
Gross Rent Multiplier	$ 1,767,548

Sale Proceeds

Projected Selling Price	$ 1,802,305
Costs of Sale (6.00%)	$ 108,138
Net Sale Proceeds Before Tax	$ 1,694,167

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	$ 1,694,167
Investor Cash Outlay	$ 202,000
Net Assets	$ 1,492,167
Average Yield
Annual Net Assets	$ 49,739
Average Cash Flow (After Taxes)	$ 43,610
Average Annual Gain (After Taxes)	$ 93,349
Average Annual Yield (After Taxes)	9.38 %

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: Franklin Town House Package RENTAL

Property Report :

Franklin Town House Package

11204 W Forest Home Ave, Franklin, WI 53132

Executive Summary

11204 W Forest Home Ave, Franklin, WI 53132

Financial Analysis

Financial Breakdown

Total Capital Needed

Total Capital Needed

Cash out of Pocket

Cash out of Pocket

Cash at Closing

Cash at Closing

Cash During Rehab

Cash During Rehab

Operating Analysis

Property Description

Operating Analysis

Annual Property Operating Data

Gross Scheduled Income (GSI)

Gross Scheduled Income (GSI)

Vacancy and Credit Loss

Vacancy and Credit Loss

Gross Operating Income (GOI)

Gross Operating Income (GOI)

Operating Expenses

Operating Expenses

Net Operating Income (NOI)

Net Operating Income (NOI)

Cash Flow (Year 1)

Cash Flow

Cash Flow

Cash Flow

Cash Flow

Operating Ratios

Operating Expense Ratio

Operating Expense Ratio

Break-Even Ratio (BER)

Break-Even Ratio (BER)

Financial Analysis

Financial Measures

Net Present Value (NPV)

Net Present Value (NPV)

Internal Rate of Return (IRR)

Internal Rate of Return (IRR)

Profitability Index

Profitability Index

Investment Return Ratios

Cash on Cash Return

Cash on Cash Return

Return on Investment

Return on Investment

Capitalization Rate

Capitalization Rate

Gross Rental Yield

Gross Rental Yield

Gross Rent Multiplier (GRM)

Gross Rent Multiplier (GRM)

Financing Overview

Loan to Value Ratio

Loan to Value Ratio

Loan to Cost Ratio

Loan to Cost Ratio

Long-term Cash Flow Forecast

Resale Analysis

Resale Price Evaluation Methods

Sale Proceeds

Net Assets and Yield

Photos