1601 N J St, Lake Worth FL 33460

1601 N J St, Lake Worth, FL 33460

Investment strategy: Rental Property

Purchase Price$ 285,000

Rent$ 6,000/mo

Monthly Cash Flow$ 3,625

Cash on Cash Return45.55 %

Financial Analysis

Cash on Cash Return	45.55 %
Internal Rate of Return (IRR)	38.94 %
Capitalization Rate	19.21 %
Gross Rent Multiplier (GRM)	3.96
Debt-coverage Ratio (DCR)	4.86
Operating Expense Ratio (OER)	19.94 %

Financial Breakdown

Purchase Price	$ 285,000
Purchase Costs	$ 10,000
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).	$ 295,000
Financing	$ 199,500
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 95,500
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.	$ 85,500
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.	$ 10,000

Operating Analysis

Rent	$ 6,000/mo
Gross Operating Income (GOI)	$ 68,400
Total Expenses	$ 13,638
Net Operating Income (NOI)	$ 54,762
Annual Debt Service	$ 11,257
Cash Flow Before Taxes (CFBT)	$ 43,504
Income Tax Liability	$ 9,701
Cash Flow After Taxes (CFAT)	$ 33,804

Purchase Price	$ 285,000
Address	1601 N J St , Lake Worth, 33460, FL
MLS^® #	RX10714671

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.	$ 72,000
Total Gross Income	$ 72,000
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.	$ 3,600
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.	$ 68,400	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	$ 2,400	3.51 %
Utilities	$ 6,000	8.77 %
Insurance	$ 4,000	5.85 %
Property tax	$ 1,238	1.81 %
Total Expenses	$ 13,638	19.94 %
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.	$ 54,762	80.06 %

Cash Flow (Year 1)

Net Operating Income	$ 54,762	80.06 %
Annual Debt Service	$ 11,257	16.46 %
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.	$ 43,504	63.60 %
Income Tax Liability	$ 9,701	14.18 %
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.	$ 33,804	49.42 %

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).	19.94 %
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.	36.40 %

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.	$ 316,599
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.	38.94 %
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	4.32
Annual Depreciation	$ 8,291

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.	45.55 %
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.	54.51 %
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.	19.21 %
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.	25.26 %
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.	3.96

Financing
Down Payment		$ 85,500
Loan		$ 199,500
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.		70.00 %
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).		70.00 %
Debt Coverage Ratio		4.86

Loan Financing of: Purchase price ($ 285,000)
Type	Amortized
Loan Amount	$ 199,500
Down payment (30%)	$ 85,500
Amortization	30 years
Interest Rate	3.88 %
Monthly Payment	$ 938.12

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	72,000	73,440	74,909	76,407	77,935	79,494	81,084	82,705	84,359	86,047
Vacancy Loss	0	3,600	3,672	3,745	3,820	3,897	3,975	4,054	4,135	4,218	4,302
Gross Operating Income	0	68,400	69,768	71,163	72,587	74,038	75,519	77,030	78,570	80,142	81,744
Expenses	0	13,638	13,911	14,189	14,473	14,762	15,058	15,359	15,666	15,979	16,299
Net Operating Income	0	54,762	55,857	56,974	58,114	59,276	60,462	61,671	62,904	64,162	65,446
Loan Payment	0	11,257	11,257	11,257	11,257	11,257	11,257	11,257	11,257	11,257	11,257
Payment Interest Part	0	7,667	7,526	7,378	7,225	7,066	6,901	6,729	6,551	6,365	6,172
Payment Principal Part	0	3,590	3,732	3,879	4,032	4,191	4,356	4,528	4,707	4,892	5,085
Cash Flow
Repairs/Construction	0	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-95,500	43,504	44,600	45,717	46,856	48,019	49,204	50,413	51,647	52,905	54,188
Depreciation	0	8,291	8,291	8,291	8,291	8,291	8,291	8,291	8,291	8,291	8,291
Taxes	0	9,701	10,010	10,326	10,649	10,980	11,317	11,663	12,016	12,377	12,746
Cash Flow After Taxes	-95,500	33,804	34,590	35,391	36,207	37,039	37,887	38,751	39,631	40,528	41,442

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%)	$ 383,016
Cap Rate (19.21%) & NOI	$ 340,685
Gross Rent Multiplier	$ 340,745

Sale Proceeds

Projected Selling Price	$ 383,016
Costs of Sale (6.00%)	$ 22,981
1. Loan Balance Payoff	$ 156,507
Net Sale Proceeds Before Tax	$ 203,528

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	$ 203,528
Investor Cash Outlay	$ 95,500
Net Assets	$ 108,028
Average Yield
Annual Net Assets	$ 10,803
Average Cash Flow (After Taxes)	$ 33,383
Average Annual Gain (After Taxes)	$ 44,185
Average Annual Yield (After Taxes)	15.50 %

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: 1601 N J St, Lake Worth RENTAL

Property Report :

1601 N J St, Lake Worth, FL 33460

Executive Summary