1325 E 40th St, Savannah, GA 31404: 1325 E 40th St, Savannah GA 31404

1325 E 40th St, Savannah, GA 31404

Multifamily: 5 bedrooms , 2 bathrooms

Year built: 1933, Size: 1370 SF

Investment strategy: Rental Property

Purchase Price$ 368,000

Rent$ 2,795/mo

Monthly Cash Flow$ 159

Cash on Cash Return2.47 %

Financial Analysis

Cash on Cash Return	2.47 %
Internal Rate of Return (IRR)	11.05 %
Capitalization Rate	5.10 %
Gross Rent Multiplier (GRM)	10.97
Debt-coverage Ratio (DCR)	1.11
Operating Expense Ratio (OER)	41.08 %

Financial Breakdown

Purchase Price	$ 368,000
Purchase Costs	$ 3,680
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).	$ 371,680
Financing	$ 294,400
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 77,280
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.	$ 73,600
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.	$ 3,680

Operating Analysis

Rent	$ 2,795/mo
Gross Operating Income (GOI)	$ 31,863
Total Expenses	$ 13,089
Net Operating Income (NOI)	$ 18,774
Annual Debt Service	$ 16,866
Cash Flow Before Taxes (CFBT)	$ 1,908
Income Tax Liability	$ -903
Cash Flow After Taxes (CFAT)	$ 2,811

Purchase Price	$ 368,000
Address	1325 E 40th St , Savannah, 31404, GA
MLS^® #	262672
Listing Agent	HEATHER BOOTH Agent
Listing Broker	Berkshire Hathaway HomeServices Bay Street Realty Group
Year Built	1933
Type	Multifamily
Number of Units
Size	1370 SF
Bedrooms	5
Bathrooms	2

Property History

Date	Price	Change	Event
2/14/2017
1/10/2006

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.	$ 33,540
Total Gross Income	$ 33,540
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.	$ 1,677
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.	$ 31,863	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	$ 3,824	12.00 %
Repairs	$ 4,000	12.55 %
Property tax	$ 3,717	11.67 %
Insurance	$ 1,548	4.86 %
Total Expenses	$ 13,089	41.08 %
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.	$ 18,774	58.92 %

Cash Flow (Year 1)

Net Operating Income	$ 18,774	58.92 %
Annual Debt Service	$ 16,866	52.93 %
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.	$ 1,908	5.99 %
Income Tax Liability	$ -903	-2.83 %
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.	$ 2,811	8.82 %

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).	41.08 %
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.	94.01 %

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.	$ 203,662
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.	11.05 %
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	3.64
Annual Depreciation	$ 10,705

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.	2.47 %
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.	16.76 %
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.	5.10 %
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.	9.11 %
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.	10.97

Financing
Down Payment		$ 73,600
Loan		$ 294,400
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		1.11

Loan Financing of: Purchase price ($ 368,000)
Type	Amortized
Loan Amount	$ 294,400
Down payment (20%)	$ 73,600
Amortization	30 years
Interest Rate	4.00 %
Monthly Payment	$ 1,405.51

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	33,540	34,211	34,895	35,593	36,305	37,031	37,772	38,527	39,297	40,083	40,885	41,703	42,537	43,388	44,255	45,140	46,043	46,964	47,903	48,861	49,839	50,835	51,852	52,889	53,947	55,026	56,126	57,249	58,394	59,562
Vacancy Loss	0	1,677	1,711	1,745	1,780	1,815	1,852	1,889	1,926	1,965	2,004	2,044	2,085	2,127	2,169	2,213	2,257	2,302	2,348	2,395	2,443	2,492	2,542	2,593	2,644	2,697	2,751	2,806	2,862	2,920	2,978
Gross Operating Income	0	31,863	32,500	33,150	33,813	34,490	35,179	35,883	36,601	37,333	38,079	38,841	39,618	40,410	41,218	42,043	42,883	43,741	44,616	45,508	46,418	47,347	48,294	49,260	50,245	51,250	52,275	53,320	54,387	55,474	56,584
Expenses	0	13,089	13,350	13,617	13,890	14,167	14,451	14,740	15,035	15,335	15,642	15,955	16,274	16,599	16,931	17,270	17,615	17,968	18,327	18,694	19,068	19,449	19,838	20,235	20,639	21,052	21,473	21,903	22,341	22,788	23,243
Net Operating Income	0	18,774	19,150	19,533	19,924	20,322	20,729	21,143	21,566	21,997	22,437	22,886	23,344	23,811	24,287	24,773	25,268	25,773	26,289	26,815	27,351	27,898	28,456	29,025	29,605	30,198	30,801	31,418	32,046	32,687	33,341
Loan Payment	0	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866	16,866
Payment Interest Part	0	11,682	11,470	11,251	11,022	10,784	10,536	10,278	10,010	9,730	9,439	9,137	8,822	8,494	8,153	7,798	7,429	7,044	6,644	6,228	5,794	5,343	4,874	4,385	3,877	3,347	2,797	2,223	1,627	1,006	360
Payment Principal Part	0	5,184	5,396	5,616	5,844	6,082	6,330	6,588	6,857	7,136	7,427	7,729	8,044	8,372	8,713	9,068	9,437	9,822	10,222	10,638	11,072	11,523	11,992	12,481	12,990	13,519	14,069	14,643	15,239	15,860	16,506
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	-77,280	1,908	2,284	2,667	3,057	3,456	3,862	4,277	4,700	5,131	5,571	6,020	6,478	6,944	7,421	7,906	8,402	8,907	9,423	9,948	10,485	11,032	11,590	12,159	12,739	13,331	13,935	14,551	15,180	15,821	16,474
Depreciation	0	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705	10,705
Taxes	0	-903	-756	-606	-451	-292	-128	40	213	391	573	761	954	1,153	1,357	1,567	1,784	2,006	2,235	2,470	2,713	2,962	3,219	3,484	3,756	4,036	4,325	4,622	4,929	5,244	5,569
Cash Flow After Taxes	-77,280	2,811	3,040	3,272	3,508	3,748	3,990	4,237	4,487	4,741	4,998	5,259	5,523	5,792	6,064	6,339	6,618	6,901	7,188	7,478	7,772	8,069	8,370	8,675	8,983	9,295	9,610	9,929	10,251	10,577	10,905

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 (3.00%)	$ 893,233
Cap Rate (5.10%) & NOI	$ 653,736
Gross Rent Multiplier	$ 653,394

Sale Proceeds

Projected Selling Price	$ 893,233
Costs of Sale (6.00%)	$ 53,594
Net Sale Proceeds Before Tax	$ 839,639

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	$ 839,639
Investor Cash Outlay	$ 77,280
Net Assets	$ 762,359
Average Yield
Annual Net Assets	$ 25,412
Average Cash Flow (After Taxes)	$ 6,251
Average Annual Gain (After Taxes)	$ 31,663
Average Annual Yield (After Taxes)	8.60 %

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: 1325 E 40th St, Savannah, GA 31404 RENTAL

Property Report :

1325 E 40th St, Savannah, GA 31404

1325 E 40th St, Savannah, GA 31404

Executive Summary