20 E U.S. Hwy 30, Schererville IN 46375

20 E U.S. Hwy 30, Schererville, IN 46375

Commercial (Office):

Investment strategy: Rental Property

Purchase Price$ 1,000,000

Rent$ 11,935/mo

Monthly Cash Flow$ 2,242

Cash on Cash Return12.81 %

Financial Analysis

Cash on Cash Return	12.81 %
Internal Rate of Return (IRR)	20.07 %
Capitalization Rate	7.37 %
Gross Rent Multiplier (GRM)	6.98
Debt-coverage Ratio (DCR)	1.58
Operating Expense Ratio (OER)	45.84 %

Financial Breakdown

Purchase Price	$ 1,000,000
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).	$ 1,010,000
Financing	$ 800,000
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 210,000
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.	$ 200,000
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.	$ 10,000

Operating Analysis

Rent	$ 11,935/mo
Gross Operating Income (GOI)	$ 136,059
Total Expenses	$ 62,373
Net Operating Income (NOI)	$ 73,686
Annual Debt Service	$ 46,782
Cash Flow Before Taxes (CFBT)	$ 26,904
Income Tax Liability	$ 6,871
Cash Flow After Taxes (CFAT)	$ 20,032

Purchase Price	$ 1,000,000
Address	20 E U.S. Hwy 30 , Schererville, 46375, IN
Type	Commercial
Category	Office

Unit	Rent
	$ 0/mo
	$ 0/mo
	$ 0/mo

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.	$ 143,220
Total Gross Income	$ 143,220
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.	$ 7,161
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.	$ 136,059	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	$ 3,000	2.20 %
Utilities	$ 6,000	4.41 %
Insurance	$ 4,662	3.43 %
Repairs	$ 4,765	3.50 %
Property tax	$ 31,946	23.48 %
Maintnance	$ 12,000	8.82 %
Total Expenses	$ 62,373	45.84 %
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.	$ 73,686	54.16 %

Cash Flow (Year 1)

Net Operating Income	$ 73,686	54.16 %
Annual Debt Service	$ 46,782	34.38 %
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.	$ 26,904	19.77 %
Income Tax Liability	$ 6,871	5.05 %
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.	$ 20,032	14.72 %

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).	45.84 %
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.	80.23 %

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.	$ 410,450
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.	20.07 %
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	2.95
Annual Depreciation	$ 20,513

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.	12.81 %
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.	27.10 %
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.	7.37 %
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.	14.32 %
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.	6.98

Financing
Down Payment		$ 200,000
Loan		$ 800,000
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		1.58

Loan Financing of: Purchase price ($ 1,000,000)
Type	Amortized
Loan Amount	$ 800,000
Down payment (20%)	$ 200,000
Amortization	25 years
Interest Rate	3.25 %
Monthly Payment	$ 3,898.53

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	143,220	146,084	149,006	151,986	155,026	158,126	161,289	164,515	167,805	171,161
Vacancy Loss	0	7,161	7,304	7,450	7,599	7,751	7,906	8,064	8,226	8,390	8,558
Gross Operating Income	0	136,059	138,780	141,556	144,387	147,275	150,220	153,225	156,289	159,415	162,603
Expenses	0	62,373	63,620	64,893	66,191	67,515	68,865	70,242	71,647	73,080	74,542
Net Operating Income	0	73,686	75,160	76,663	78,196	79,760	81,355	82,982	84,642	86,335	88,062
Loan Payment	0	46,782	46,782	46,782	46,782	46,782	46,782	46,782	46,782	46,782	46,782
Payment Interest Part	0	25,688	24,992	24,273	23,530	22,763	21,971	21,152	20,307	19,434	18,531
Payment Principal Part	0	21,095	21,791	22,509	23,252	24,019	24,811	25,630	26,475	27,349	28,251
Cash Flow
Repairs/Construction	0	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-210,000	26,904	28,377	29,881	31,414	32,978	34,573	36,200	37,860	39,553	41,279
Depreciation	0	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513
Taxes	0	6,871	7,414	7,969	8,538	9,121	9,718	10,329	10,956	11,597	12,254
Cash Flow After Taxes	-210,000	20,032	20,964	21,911	22,876	23,857	24,855	25,871	26,904	27,955	29,025

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%)	$ 1,343,916
Cap Rate (7.37%) & NOI	$ 1,194,865
Gross Rent Multiplier	$ 1,194,705

Sale Proceeds

Projected Selling Price	$ 1,343,916
Costs of Sale (6.00%)	$ 80,635
1. Loan Balance Payoff	$ 554,818
Net Sale Proceeds Before Tax	$ 708,463

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	$ 708,463
Investor Cash Outlay	$ 210,000
Net Assets	$ 498,463
Average Yield
Annual Net Assets	$ 49,846
Average Cash Flow (After Taxes)	$ 21,523
Average Annual Gain (After Taxes)	$ 71,369
Average Annual Yield (After Taxes)	7.14 %

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: 20 E U.S. Hwy 30, Schererville RENTAL

Property Report :

20 E U.S. Hwy 30, Schererville, IN 46375

Executive Summary