1509 Ridgeway Ave, Durham NC 27701

1509 Ridgeway Ave, Durham, NC 27701

Singlefamily: 3 bedrooms , 1 bathroom

Year built: 1965, Size: 975 SF

Investment strategy: Rental Property

Purchase Price$ 138,000

Rent$ 1,188/mo

Monthly Cash Flow$ 390

Cash on Cash Return16.96 %

Financial Analysis

Cash on Cash Return	16.96 %
Internal Rate of Return (IRR)	13.73 %
Capitalization Rate	7.98 %
Gross Rent Multiplier (GRM)	9.68
Debt-coverage Ratio (DCR)	1.74
Operating Expense Ratio (OER)	14.22 %

Financial Breakdown

Purchase Price	$ 138,000
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).	$ 138,000
Financing	$ 110,400
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 27,600
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.	$ 27,600
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.	$ 0

Operating Analysis

Rent	$ 1,188/mo
Gross Operating Income (GOI)	$ 12,830
Total Expenses	$ 1,824
Net Operating Income (NOI)	$ 11,006
Annual Debt Service	$ 6,325
Cash Flow Before Taxes (CFBT)	$ 4,682
Income Tax Liability	$ 1,305
Cash Flow After Taxes (CFAT)	$ 3,376

1509 Ridgeway Ave, Durham, NC 27701 is a single family home built in 1965. This property was last sold for $36,500 in 1995 and currently has an estimated value of $144,200. According to the Durham public records, the property at 1509 Ridgeway Ave, Durham, NC 27701 has approximately 975 square feet, 3 beds and 1 baths with a lot size of 7,100 square feet. Nearby schools include Hillside High, Bethesda Elementary and Lowe's Grove Middle.

Purchase Price	$ 138,000
Address	1509 Ridgeway Ave , Durham, 27701, NC
Year Built	1965
Type	Singlefamily
Size	975 SF
Bedrooms	3
Bathrooms	1

Property History

Date	Price	Change	Event
2/17/1995
7/29/1994

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.	$ 14,256
Total Gross Income	$ 14,256
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.	$ 1,426
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.	$ 12,830	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	7.39 %
Property tax	$ 876	6.83 %
Total Expenses	$ 1,824	14.22 %
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.	$ 11,006	85.78 %

Cash Flow (Year 1)

Net Operating Income	$ 11,006	85.78 %
Annual Debt Service	$ 6,325	49.30 %
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.	$ 4,682	36.49 %
Income Tax Liability	$ 1,305	10.17 %
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.	$ 3,376	26.31 %

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).	14.22 %
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.	63.51 %

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.	$ 63,307
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.	13.73 %
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	3.29
Annual Depreciation	$ 4,015

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.	16.96 %
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.	21.96 %
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.	7.98 %
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.	10.33 %
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.	9.68

Financing
Down Payment		$ 27,600
30y		$ 110,400
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		1.74

30y Financing of: Purchase price ($ 138,000)
Type	Amortized
Loan Amount	$ 110,400
Down payment (20%)	$ 27,600
Amortization	30 years
Interest Rate	4.00 %
Monthly Payment	$ 527.07

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	14,256	14,399	14,543	14,688	14,835	14,983	15,133	15,284	15,437	15,592	15,748	15,905	16,064	16,225	16,387	16,551	16,716	16,883	17,052	17,223	17,395	17,569	17,745	17,922	18,101	18,282	18,465	18,650	18,836	19,025
Vacancy Loss	0	1,426	1,440	1,454	1,469	1,483	1,498	1,513	1,528	1,544	1,559	1,575	1,590	1,606	1,622	1,639	1,655	1,672	1,688	1,705	1,722	1,739	1,757	1,774	1,792	1,810	1,828	1,846	1,865	1,884	1,902
Gross Operating Income	0	12,830	12,959	13,088	13,219	13,351	13,485	13,620	13,756	13,894	14,032	14,173	14,314	14,458	14,602	14,748	14,896	15,045	15,195	15,347	15,501	15,656	15,812	15,970	16,130	16,291	16,454	16,619	16,785	16,953	17,122
Expenses	0	1,824	1,860	1,898	1,936	1,974	2,014	2,054	2,095	2,137	2,180	2,223	2,268	2,313	2,360	2,407	2,455	2,504	2,554	2,605	2,657	2,710	2,765	2,820	2,876	2,934	2,992	3,052	3,113	3,176	3,239
Net Operating Income	0	11,006	11,098	11,191	11,284	11,377	11,471	11,566	11,661	11,756	11,853	11,949	12,047	12,144	12,243	12,342	12,441	12,541	12,641	12,742	12,843	12,945	13,048	13,150	13,254	13,357	13,462	13,566	13,672	13,777	13,883
Loan Payment	0	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325	6,325
Payment Interest Part	0	4,381	4,301	4,219	4,133	4,044	3,951	3,854	3,754	3,649	3,540	3,426	3,308	3,185	3,057	2,924	2,786	2,642	2,492	2,335	2,173	2,004	1,828	1,644	1,454	1,255	1,049	834	610	377	135
Payment Principal Part	0	1,944	2,023	2,106	2,192	2,281	2,374	2,471	2,571	2,676	2,785	2,898	3,017	3,139	3,267	3,400	3,539	3,683	3,833	3,989	4,152	4,321	4,497	4,680	4,871	5,070	5,276	5,491	5,715	5,948	6,190
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	-27,600	4,682	4,773	4,866	4,959	5,052	5,146	5,241	5,336	5,432	5,528	5,625	5,722	5,820	5,918	6,017	6,116	6,216	6,316	6,417	6,519	6,620	6,723	6,826	6,929	7,033	7,137	7,242	7,347	7,452	7,558
Depreciation	0	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015	4,015
Taxes	0	1,305	1,391	1,478	1,568	1,659	1,753	1,848	1,946	2,046	2,149	2,254	2,362	2,472	2,585	2,701	2,820	2,942	3,067	3,196	3,328	3,463	3,602	3,745	3,892	4,044	4,199	4,359	4,523	4,692	4,867
Cash Flow After Taxes	-27,600	3,376	3,383	3,387	3,391	3,393	3,394	3,393	3,390	3,385	3,379	3,371	3,360	3,348	3,333	3,316	3,296	3,274	3,249	3,221	3,191	3,157	3,120	3,080	3,036	2,989	2,938	2,883	2,824	2,760	2,692

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%)	$ 186,003
Cap Rate (7.98%) & NOI	$ 173,974
Gross Rent Multiplier	$ 184,159

Sale Proceeds

Projected Selling Price	$ 186,003
Costs of Sale (6.00%)	$ 11,160
Net Sale Proceeds Before Tax	$ 174,843

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	$ 174,843
Investor Cash Outlay	$ 27,600
Net Assets	$ 147,243
Average Yield
Annual Net Assets	$ 4,908
Average Cash Flow (After Taxes)	$ 3,121
Average Annual Gain (After Taxes)	$ 8,029
Average Annual Yield (After Taxes)	5.82 %

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: 1509 Ridgeway Ave, Durham RENTAL

Property Report :

1509 Ridgeway Ave, Durham, NC 27701

Executive Summary