MAIN STREET: 1209 Main St, Cincinnati OH 45202

1209 Main St, Cincinnati, OH 45202

Commercial (Mixed-Use):

Investment strategy: Rental Property

Purchase Price$ 700,000

Rent$ 2,500/mo

Monthly Cash Flow$ -2,151

Cash on Cash Return-14.75 %

Financial Analysis

Cash on Cash Return	-14.75 %
Internal Rate of Return (IRR)	3.51 %
Capitalization Rate	1.42 %
Gross Rent Multiplier (GRM)	23.33
Debt-coverage Ratio (DCR)	0.28
Operating Expense Ratio (OER)	65.76 %

Financial Breakdown

Purchase Price	$ 700,000
Purchase Costs	$ 0
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).	$ 700,000
Financing	$ 525,000
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 175,000
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.	$ 175,000
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.	$ 0

Operating Analysis

Rent	$ 2,500/mo
Gross Operating Income (GOI)	$ 29,070
Total Expenses	$ 19,117
Net Operating Income (NOI)	$ 9,953
Annual Debt Service	$ 35,771
Cash Flow Before Taxes (CFBT)	$ -25,818
Income Tax Liability	$ -8,276
Cash Flow After Taxes (CFAT)	$ -17,542

Purchase Price	$ 700,000
Address	1209 Main St , Cincinnati, 45202, OH
Type	Commercial
Category	Mixed-Use

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.	$ 30,000
Total Gross Income	$ 30,000
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.	$ 930
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).
Property manager	$ 2,035	7.00 %
WATER/SEWER	$ 5,236	18.01 %
Insurance	$ 1,800	6.19 %
Property tax	$ 3,923	13.50 %
ELECTRIC/GAS	$ 6,123	21.06 %
Total Expenses	$ 19,117	65.76 %
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.	$ 9,953	34.24 %

Cash Flow (Year 1)

Net Operating Income	$ 9,953	34.24 %
Annual Debt Service	$ 35,771	123.05 %
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.	$ -25,818	-88.81 %
Income Tax Liability	$ -8,276	-28.47 %
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.	$ -17,542	-60.34 %

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).	65.76 %
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.	188.81 %

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.	$ -32,285
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.	3.51 %
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	0.82
Annual Depreciation	$ 14,359

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.	-14.75 %
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.	-2.75 %
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.	1.42 %
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.	4.29 %
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.	23.33

Financing
Down Payment		$ 175,000
Loan		$ 525,000
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.		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		0.28

Loan Financing of: Purchase price ($ 700,000)
Type	Amortized
Loan Amount	$ 525,000
Down payment (25%)	$ 175,000
Amortization	30 years
Interest Rate	5.50 %
Monthly Payment	$ 2,980.89

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	30,000	30,600	31,212	31,836	32,473	33,122	33,785	34,461	35,150	35,853
Vacancy Loss	0	930	949	968	987	1,007	1,027	1,047	1,068	1,090	1,111
Gross Operating Income	0	29,070	29,651	30,244	30,849	31,466	32,096	32,738	33,392	34,060	34,741
Expenses	0	19,117	19,499	19,889	20,287	20,693	21,107	21,529	21,959	22,398	22,846
Net Operating Income	0	9,953	10,152	10,355	10,562	10,774	10,989	11,209	11,433	11,662	11,895
Loan Payment	0	35,771	35,771	35,771	35,771	35,771	35,771	35,771	35,771	35,771	35,771
Payment Interest Part	0	28,698	28,300	27,878	27,433	26,963	26,466	25,941	25,386	24,801	24,182
Payment Principal Part	0	7,072	7,471	7,893	8,338	8,808	9,305	9,830	10,384	10,970	11,589
Cash Flow
Repairs/Construction	0	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-175,000	-25,818	-25,619	-25,416	-25,208	-24,997	-24,782	-24,562	-24,338	-24,109	-23,876
Depreciation	0	14,359	14,359	14,359	14,359	14,359	14,359	14,359	14,359	14,359	14,359
Taxes	0	-8,276	-8,127	-7,970	-7,807	-7,637	-7,459	-7,273	-7,078	-6,875	-6,661
Cash Flow After Taxes	-175,000	-17,542	-17,492	-17,445	-17,401	-17,360	-17,323	-17,289	-17,260	-17,235	-17,214

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%)	$ 940,741
Cap Rate (1.42%) & NOI	$ 837,668
Gross Rent Multiplier	$ 836,445

Sale Proceeds

Projected Selling Price	$ 940,741
Costs of Sale (6.00%)	$ 56,444
1. Loan Balance Payoff	$ 433,340
Net Sale Proceeds Before Tax	$ 450,956

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	$ 450,956
Investor Cash Outlay	$ 175,000
Net Assets	$ 275,956
Average Yield
Annual Net Assets	$ 27,596
Average Cash Flow (After Taxes)	$ -15,635
Average Annual Gain (After Taxes)	$ 11,961
Average Annual Yield (After Taxes)	1.71 %

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: MAIN STREET RENTAL

Property Report :

MAIN STREET

1209 Main St, Cincinnati, OH 45202

Executive Summary

1209 Main St, Cincinnati, OH 45202

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