1857 E American Way Unit 14, Eagle Mountain UT 84005

1857 E American Way Unit 14, Eagle Mountain, UT 84005

Singlefamily: 3 bedrooms , 2 bathrooms

Year built: 2018, Size: 1806 SF

Investment strategy: Rental Property

72 Hour Sale! Starts this Saturday June 25 with an Open House from noon until 2pm. Awesome house priced to sell this weekend! Sellers have loved this house and the community but the time has come and they need to move. Park like front yard with playgrounds all around and wide open spaces. Beautiful views from the front porch. Come see me on Saturday from 12:00 to 2:00 pm.

Purchase Price$ 420,000

Rent$ 2,095/mo

Monthly Cash Flow$ 475

Cash on Cash Return2.31 %

Financial Analysis

Cash on Cash Return	2.31 %
Internal Rate of Return (IRR)	6.92 %
Capitalization Rate	4.41 %
Gross Rent Multiplier (GRM)	16.71
Debt-coverage Ratio (DCR)	1.44
Operating Expense Ratio (OER)	25.66 %

Financial Breakdown

Purchase Price	$ 420,000
Purchase Costs	$ 4,200
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).	$ 424,200
Financing	$ 178,000
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 246,200
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.	$ 0
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.	$ 246,200

Operating Analysis

Rent	$ 2,095/mo
Gross Operating Income (GOI)	$ 24,889
Total Expenses	$ 6,388
Net Operating Income (NOI)	$ 18,501
Annual Debt Service	$ 12,806
Cash Flow Before Taxes (CFBT)	$ 5,694
Income Tax Liability	$ -1,084
Cash Flow After Taxes (CFAT)	$ 6,779

Purchase Price	$ 420,000
Address	1857 E American Way Unit 14 , Eagle Mountain, 84005, UT
MLS^® #	1820905
Listing Agent	Steve Judkins
Listing Broker	Kw South Valley Keller Williams
Year Built	2018
Type	Singlefamily
Size	1806 SF
Bedrooms	3
Bathrooms	2

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.	$ 25,140
Total Gross Income	$ 25,140
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.	$ 251
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.	$ 24,889	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	$ 2,215	8.90 %
Repairs	$ 747	3.00 %
Association fees	$ 1,140	4.58 %
Property tax	$ 1,446	5.81 %
Insurance	$ 840	3.37 %
Total Expenses	$ 6,388	25.66 %
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.	$ 18,501	74.34 %

Cash Flow (Year 1)

Net Operating Income	$ 18,501	74.34 %
Annual Debt Service	$ 12,806	51.45 %
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.	$ 5,694	22.88 %
Income Tax Liability	$ -1,084	-4.36 %
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.	$ 6,779	27.24 %

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).	25.66 %
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.	77.12 %

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.	$ 125,093
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.	6.92 %
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	1.51
Annual Depreciation	$ 12,218

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.	2.31 %
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.	7.43 %
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.	4.41 %
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.	5.99 %
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.	16.71

Financing
Down Payment		$ 0
Loan		$ 178,000
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.		42.38 %
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).		42.38 %
Debt Coverage Ratio		1.44

Loan Financing of: Specific amount ($ 178,000)
Type	Amortized
Loan Amount	$ 178,000
Down payment (0%)	$ 0
Amortization	30 years
Interest Rate	6.00 %
Monthly Payment	$ 1,067.20

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	25,140	25,643	26,156	26,679	27,212	27,757	28,312	28,878	29,456	30,045	30,646	31,258	31,884	32,521	33,172	33,835	34,512	35,202	35,906	36,624	37,357	38,104	38,866	39,643	40,436	41,245	42,070	42,911	43,769	44,645
Vacancy Loss	0	251	256	262	267	272	278	283	289	295	300	306	313	319	325	332	338	345	352	359	366	374	381	389	396	404	412	421	429	438	446
Gross Operating Income	0	24,889	25,386	25,894	26,412	26,940	27,479	28,029	28,589	29,161	29,744	30,339	30,946	31,565	32,196	32,840	33,497	34,167	34,850	35,547	36,258	36,983	37,723	38,477	39,247	40,032	40,832	41,649	42,482	43,332	44,198
Expenses	0	6,388	6,515	6,646	6,779	6,914	7,053	7,194	7,338	7,484	7,634	7,787	7,942	8,101	8,263	8,428	8,597	8,769	8,944	9,123	9,306	9,492	9,682	9,875	10,073	10,274	10,480	10,689	10,903	11,121	11,344
Net Operating Income	0	18,501	18,871	19,248	19,633	20,026	20,426	20,835	21,252	21,677	22,110	22,552	23,003	23,464	23,933	24,412	24,900	25,398	25,906	26,424	26,952	27,491	28,041	28,602	29,174	29,757	30,353	30,960	31,579	32,210	32,855
Loan Payment	0	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806	12,806
Payment Interest Part	0	10,621	10,486	10,343	10,191	10,029	9,858	9,676	9,483	9,278	9,060	8,829	8,584	8,324	8,047	7,754	7,442	7,111	6,760	6,387	5,991	5,571	5,124	4,651	4,148	3,614	3,047	2,445	1,806	1,127	407
Payment Principal Part	0	2,186	2,321	2,464	2,616	2,777	2,948	3,130	3,323	3,528	3,746	3,977	4,222	4,483	4,759	5,053	5,364	5,695	6,046	6,419	6,815	7,236	7,682	8,156	8,659	9,193	9,760	10,362	11,001	11,679	12,400
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	-246,200	5,694	6,064	6,442	6,827	7,220	7,620	8,029	8,445	8,870	9,304	9,746	10,197	10,657	11,126	11,605	12,093	12,591	13,099	13,617	14,146	14,685	15,235	15,796	16,368	16,951	17,546	18,153	18,772	19,404	20,048
Depreciation	0	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218	12,218
Taxes	0	-1,084	-958	-828	-694	-555	-412	-265	-112	45	208	376	550	730	917	1,110	1,310	1,517	1,732	1,955	2,186	2,426	2,675	2,933	3,202	3,481	3,772	4,074	4,389	4,716	5,057
Cash Flow After Taxes	-246,200	6,779	7,023	7,270	7,521	7,775	8,032	8,293	8,558	8,825	9,096	9,370	9,647	9,927	10,210	10,495	10,783	11,074	11,367	11,663	11,960	12,259	12,560	12,862	13,166	13,470	13,774	14,079	14,384	14,688	14,991

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%)	$ 1,019,450
Cap Rate (4.41%) & NOI	$ 745,003
Gross Rent Multiplier	$ 746,013

Sale Proceeds

Projected Selling Price	$ 1,019,450
Costs of Sale (6.00%)	$ 61,167
Net Sale Proceeds Before Tax	$ 958,283

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	$ 958,283
Investor Cash Outlay	$ 246,200
Net Assets	$ 712,083
Average Yield
Annual Net Assets	$ 23,736
Average Cash Flow (After Taxes)	$ 10,230
Average Annual Gain (After Taxes)	$ 33,966
Average Annual Yield (After Taxes)	8.09 %

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: 1857 E American Way Unit 14, Eagle Mountain RENTAL

Property Report :

1857 E American Way Unit 14, Eagle Mountain, UT 84005

Executive Summary