1203 S 29th St, Milwaukee WI 53215

1203 S 29th St, Milwaukee, WI 53215

Apartment: 8 bedrooms , 4 bathrooms

Year built: 1914,

Investment strategy: Rental Property

4 Unit Apartment

Purchase Price$ 350,000

Rent$ 3,100/mo

Monthly Cash Flow$ 482

Cash on Cash Return6.39 %

Financial Analysis

Cash on Cash Return	6.39 %
Internal Rate of Return (IRR)	12.59 %
Capitalization Rate	6.65 %
Gross Rent Multiplier (GRM)	9.41
Debt-coverage Ratio (DCR)	1.33
Operating Expense Ratio (OER)	34.25 %

Financial Breakdown

Purchase Price	$ 350,000
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).	$ 353,000
Financing	$ 262,500
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 90,500
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.	$ 87,500
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	$ 3,100/mo
Gross Operating Income (GOI)	$ 35,424
Total Expenses	$ 12,134
Net Operating Income (NOI)	$ 23,290
Annual Debt Service	$ 17,509
Cash Flow Before Taxes (CFBT)	$ 5,781
Income Tax Liability	$ 354
Cash Flow After Taxes (CFAT)	$ 5,428

Purchased for 225K in January of 2019
Refurbished all units
2 LG 2BR (with an office, could be considered 3 BR Units) ($950 and $975)
2 2BR Units ($575 & $600)
Garage: Detached 2 car ($50 each stall)
Roof, 7 years old
HVAC: 4 individual gas boilers
Tenants: All tenants replaced in 2017

Purchase Price	$ 350,000
Address	1203 S 29th St , Milwaukee, 53215, WI
Year Built	1914
Type	Apartment
Bedrooms	8
Bathrooms	4

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.	$ 37,200
Garage Rental	$ 1,200
Total Gross Income	$ 38,400
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.	$ 2,976
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.	$ 35,424	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).
Water	$ 2,100	5.93 %
Insurance	$ 1,900	5.36 %
Repairs	$ 3,080	8.70 %
Property tax	$ 3,974	11.22 %
Lawn and Snow	$ 1,080	3.05 %
Total Expenses	$ 12,134	34.25 %
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.	$ 23,290	65.75 %

Cash Flow (Year 1)

Net Operating Income	$ 23,290	65.75 %
Annual Debt Service	$ 17,509	49.43 %
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.	$ 5,781	16.32 %
Income Tax Liability	$ 354	1.00 %
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.	$ 5,428	15.32 %

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).	34.25 %
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.	83.68 %

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.	$ 228,047
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.	12.59 %
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	3.52
Annual Depreciation	$ 10,182

Holding period of 25 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.	6.39 %
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.	17.99 %
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.	6.65 %
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.	10.63 %
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.	9.41

Financing
Down Payment		$ 87,500
Commercial Loan		$ 262,500
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).		75.00 %
Debt Coverage Ratio		1.33

Commercial Loan Financing of: Purchase price ($ 350,000)
Type	Amortized
Loan Amount	$ 262,500
Down payment (25%)	$ 87,500
Amortization	25 years
Interest Rate	4.50 %
Monthly Payment	$ 1,459.06

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
Operational Analysis
Gross Scheduled Income	0	38,400	39,144	39,903	40,677	41,466	42,272	43,093	43,931	44,786	45,657	46,547	47,454	48,379	49,322	50,285	51,266	52,268	53,289	54,331	55,393	56,477	57,583	58,710	59,861	61,034
Vacancy Loss	0	2,976	3,036	3,096	3,158	3,221	3,286	3,351	3,418	3,487	3,557	3,628	3,700	3,774	3,850	3,927	4,005	4,085	4,167	4,250	4,335	4,422	4,511	4,601	4,693	4,787
Gross Operating Income	0	35,424	36,108	36,807	37,519	38,245	38,986	39,742	40,513	41,299	42,101	42,919	43,753	44,604	45,472	46,358	47,261	48,182	49,122	50,080	51,058	52,055	53,072	54,110	55,168	56,247
Expenses	0	12,134	12,377	12,624	12,877	13,134	13,397	13,665	13,938	14,217	14,501	14,791	15,087	15,389	15,697	16,011	16,331	16,658	16,991	17,331	17,677	18,031	18,391	18,759	19,134	19,517
Net Operating Income	0	23,290	23,732	24,182	24,642	25,111	25,589	26,077	26,574	27,082	27,599	28,127	28,666	29,215	29,776	30,347	30,930	31,525	32,131	32,750	33,381	34,024	34,681	35,350	36,033	36,730
Loan Payment	0	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509	17,509
Payment Interest Part	0	11,694	11,426	11,147	10,855	10,549	10,229	9,895	9,545	9,179	8,797	8,396	7,978	7,540	7,082	6,603	6,102	5,578	5,030	4,457	3,857	3,230	2,574	1,888	1,170	419
Payment Principal Part	0	5,815	6,082	6,362	6,654	6,960	7,279	7,614	7,964	8,329	8,712	9,112	9,531	9,969	10,427	10,906	11,407	11,931	12,479	13,052	13,652	14,279	14,935	15,621	16,339	17,089
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
Cash Flow Before Taxes	-90,500	5,781	6,223	6,674	7,133	7,602	8,080	8,568	9,066	9,573	10,091	10,619	11,157	11,707	12,267	12,838	13,421	14,016	14,622	15,241	15,872	16,516	17,172	17,842	18,525	19,221
Depreciation	0	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182	10,182
Taxes	0	354	531	713	901	1,095	1,294	1,500	1,712	1,930	2,155	2,387	2,627	2,873	3,128	3,391	3,662	3,941	4,230	4,528	4,835	5,153	5,481	5,820	6,170	6,532
Cash Flow After Taxes	-90,500	5,428	5,692	5,960	6,232	6,507	6,786	7,068	7,354	7,643	7,935	8,231	8,531	8,833	9,139	9,448	9,760	10,075	10,393	10,713	11,037	11,362	11,691	12,022	12,354	12,689

Note: All amounts in the table above are in $

Resale Price Evaluation Methods

The property is sold after 25 years. Below is the resale price calculated using different methods.

Appreciation (3.00%)	$ 732,822
Cap Rate (6.65%) & NOI	$ 552,332
Gross Rent Multiplier	$ 574,329

Sale Proceeds

Projected Selling Price	$ 732,822
Costs of Sale (6.00%)	$ 43,969
Net Sale Proceeds Before Tax	$ 688,853

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	$ 688,853
Investor Cash Outlay	$ 90,500
Net Assets	$ 598,353
Average Yield
Annual Net Assets	$ 23,934
Average Cash Flow (After Taxes)	$ 8,408
Average Annual Gain (After Taxes)	$ 32,342
Average Annual Yield (After Taxes)	9.24 %

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: 1203 S 29th St, Milwaukee RENTAL

Property Report :

1203 S 29th St, Milwaukee, WI 53215

Executive Summary