1304 Drew St, Durham NC 27701

1304 Drew St, Durham, NC 27701

Singlefamily: 3 bedrooms , 2 bathrooms

Year built: 1940, Size: 1250 SF

Investment strategy: Rental Property

Purchase Price$ 225,000

Rent$ 1,550/mo

Monthly Cash Flow$ 1,166

Cash on Cash Return31.10 %

Financial Analysis

Cash on Cash Return	31.10 %
Internal Rate of Return (IRR)	23.44 %
Capitalization Rate	6.22 %
Gross Rent Multiplier (GRM)	12.10
Debt-coverage Ratio (DCR)	0.00
Operating Expense Ratio (OER)	16.40 %

Financial Breakdown

Purchase Price	$ 225,000
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).	$ 225,000
Financing	$ 180,000
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 45,000
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.	$ 45,000
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	$ 1,550/mo
Gross Operating Income (GOI)	$ 16,740
Total Expenses	$ 2,745
Net Operating Income (NOI)	$ 13,995
Annual Debt Service	$ 0
Cash Flow Before Taxes (CFBT)	$ 13,995
Income Tax Liability	$ 3,725
Cash Flow After Taxes (CFAT)	$ 10,270

Cute 3 bedroom w/ 2 full bath located in 27701. Nice big fenced in back yard with large deck. Concrete driveway that goes into back yard for privacy. Rocking chair front porch to sit out and enjoy the evenings. Roof put on in 2018. Property is As-Is.

Purchase Price	$ 225,000
Address	1304 Drew St , Durham, 27701, NC
MLS^® #	2393622
Listing Agent	Amy West
Listing Broker	West & Woodall, Town Lake & Country Properties
Year Built	1940
Type	Singlefamily
Size	1250 SF
Bedrooms	3
Bathrooms	2

Property History

Date	Price	Change	Event
4/11/2019
12/20/2005
7/16/1992

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.	$ 18,600
Total Gross Income	$ 18,600
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.	$ 1,860
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.	$ 16,740	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	$ 948	5.66 %
Property tax	$ 1,125	6.72 %
Insurance	$ 672	4.01 %
Total Expenses	$ 2,745	16.40 %
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.	$ 13,995	83.60 %

Cash Flow (Year 1)

Net Operating Income	$ 13,995	83.60 %
Annual Debt Service	$ 0	0.00 %
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.	$ 13,995	83.60 %
Income Tax Liability	$ 3,725	22.25 %
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.	$ 10,270	61.35 %

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).	16.40 %
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.	16.40 %

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.	$ 147,034
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.	23.44 %
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	4.27
Annual Depreciation	$ 6,545

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.	31.10 %
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.	36.10 %
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.	6.22 %
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.	8.27 %
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.	12.10

Financing
Down Payment		$ 45,000
30y		$ 180,000
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		0.00

30y Financing of: Purchase price ($ 225,000)
Type	Amortized
Loan Amount	$ 180,000
Down payment (20%)	$ 45,000
Amortization	30 years
Interest Rate	0.00 %
Monthly Payment	$ 0.00

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	18,600	18,786	18,974	19,164	19,355	19,549	19,744	19,942	20,141	20,343	20,546	20,751	20,959	21,169	21,380	21,594	21,810	22,028	22,248	22,471	22,696	22,923	23,152	23,383	23,617	23,853	24,092	24,333	24,576	24,822
Vacancy Loss	0	1,860	1,879	1,897	1,916	1,936	1,955	1,974	1,994	2,014	2,034	2,055	2,075	2,096	2,117	2,138	2,159	2,181	2,203	2,225	2,247	2,270	2,292	2,315	2,338	2,362	2,385	2,409	2,433	2,458	2,482
Gross Operating Income	0	16,740	16,907	17,076	17,247	17,420	17,594	17,770	17,948	18,127	18,308	18,491	18,676	18,863	19,052	19,242	19,435	19,629	19,825	20,024	20,224	20,426	20,630	20,837	21,045	21,255	21,468	21,683	21,899	22,118	22,340
Expenses	0	2,745	2,800	2,856	2,913	2,971	3,031	3,091	3,153	3,216	3,281	3,346	3,413	3,481	3,551	3,622	3,694	3,768	3,844	3,921	3,999	4,079	4,161	4,244	4,329	4,415	4,503	4,594	4,685	4,779	4,875
Net Operating Income	0	13,995	14,108	14,221	14,334	14,448	14,563	14,679	14,794	14,911	15,028	15,145	15,263	15,382	15,501	15,620	15,740	15,861	15,982	16,103	16,225	16,347	16,470	16,593	16,716	16,840	16,964	17,089	17,214	17,339	17,465
Loan Payment	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
Payment Interest Part	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
Payment Principal Part	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	180,000
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	-45,000	13,995	14,108	14,221	14,334	14,448	14,563	14,679	14,794	14,911	15,028	15,145	15,263	15,382	15,501	15,620	15,740	15,861	15,982	16,103	16,225	16,347	16,470	16,593	16,716	16,840	16,964	17,089	17,214	17,339	17,465
Depreciation	0	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545	6,545
Taxes	0	3,725	3,781	3,838	3,895	3,952	4,009	4,067	4,125	4,183	4,241	4,300	4,359	4,418	4,478	4,538	4,598	4,658	4,718	4,779	4,840	4,901	4,962	5,024	5,086	5,148	5,210	5,272	5,335	5,397	5,460
Cash Flow After Taxes	-45,000	10,270	10,326	10,383	10,440	10,497	10,554	10,612	10,670	10,728	10,786	10,845	10,904	10,963	11,023	11,083	11,143	11,203	11,263	11,324	11,385	11,446	11,507	11,569	11,631	11,693	11,755	11,817	11,880	11,942	12,005

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 (1.00%)	$ 303,266
Cap Rate (6.22%) & NOI	$ 280,786
Gross Rent Multiplier	$ 300,344

Sale Proceeds

Projected Selling Price	$ 303,266
Costs of Sale (6.00%)	$ 18,196
1. Loan Balance Payoff	$ 180,000
Net Sale Proceeds Before Tax	$ 105,070

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	$ 105,070
Investor Cash Outlay	$ 45,000
Net Assets	$ 60,070
Average Yield
Annual Net Assets	$ 2,002
Average Cash Flow (After Taxes)	$ 10,721
Average Annual Gain (After Taxes)	$ 12,724
Average Annual Yield (After Taxes)	5.65 %

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: 1304 Drew St, Durham RENTAL

Property Report :

1304 Drew St, Durham, NC 27701

Executive Summary