98040, Inc - Commissary Kitchen: 210 S Lucile St, Seattle WA 98108 | Zilculator: Real Estate Analysis & Marketing

210 S Lucile St, Seattle, WA 98108

Commercial (Special-Purpose):

Size: 14775 SF

Investment strategy: Wholesale deal offered to a rental investor

Contract Price$ 6,000,000

Wholesale Fee$ 100,000

Monthly Cash Flow$ -16,089

Cash on Cash Return-62.28 %

A-B Investment

Contract Price	$ 6,000,000
Wholesale Assignment Fee	$ 100,000
Wholesale Price	$ 6,100,000

B-C Investment

Purchase Price	$ 6,100,000
Purchase Costs	$ 60,000
Repair/Construction Costs	$ 100,000
Total Capital Needed Total Capital Needed Includes all projects costs (except selling costs). Total Capital Needed Includes all projects costs (except selling costs).	$ 6,260,000
Net Present Value (NPV)	$ 514,068
Internal Rate of Return (IRR)	6.11 %
Cash on Cash Return	-62.28 %
Capitalization Rate	3.84 %
After Repair Value	$ 6,000,000

Operating Analysis

Rent	$ 38,400/mo
Gross Operating Income (GOI)	$ 460,800
Total Expenses	$ 230,400
Net Operating Income (NOI)	$ 230,400
Annual Debt Service	$ 423,466
Cash Flow Before Taxes (CFBT)	$ -193,066
Income Tax Liability	$ -59,894
Cash Flow After Taxes (CFAT)	$ -133,172

Purchase Price	$ 6,100,000
Address	210 S Lucile St , Seattle, 98108, WA
MLS^® #	39322779
Type	Commercial
Category	Special-Purpose
Size	14775 SF

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.	$ 460,800
Total Gross Income	$ 460,800
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.	$ 0
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.	$ 460,800	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).
50% rule	$ 230,400	50.00 %
Total Expenses	$ 230,400	50.00 %
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.	$ 230,400	50.00 %

Cash Flow (Year 1)

Net Operating Income	$ 230,400	50.00 %
Annual Debt Service	$ 423,466	91.90 %
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.	$ -193,066	-41.90 %
Income Tax Liability	$ -59,894	-13.00 %
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.	$ -133,172	-28.90 %

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).	50.00 %
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.	141.90 %

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.	$ 514,068
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.	6.11 %
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	2.66
Annual Depreciation	$ 125,128

Holding period of 15 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.	-62.28 %
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.	-3.25 %
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.	3.84 %
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.	7.55 %
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.	13.02

Financing		% of ARV
Down Payment	$ 50,000	0.83 %
98040, Inc. Credit Line	$ 450,000	7.50 %
98040, Inc. Seller Finance	$ 5,500,000	91.67 %
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.		97.54 %
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).		95.97 %
Debt Coverage Ratio		0.54

98040, Inc. Credit Line Financing of: Specific amount ($ 500,000)
Type	Amortized
Loan Amount	$ 450,000
Down payment (10%)	$ 50,000
Amortization	25 years
Balloon Payment	Year 10
Interest Rate	3.75 %
Monthly Payment	$ 2,313.59

98040, Inc. Seller Finance Financing of: Specific amount ($ 5,500,000)
Type	Amortized
Loan Amount	$ 5,500,000
Down payment (0%)	$ 0
Amortization	30 years
Balloon Payment	Year 5
Interest Rate	6.00 %
Monthly Payment	$ 32,975.28

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
Operational Analysis
Gross Scheduled Income	0	460,800	470,016	479,416	489,005	498,785	508,760	518,936	529,314	539,901	550,699	561,713	572,947	584,406	596,094	608,016
Vacancy Loss	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Gross Operating Income	0	460,800	470,016	479,416	489,005	498,785	508,760	518,936	529,314	539,901	550,699	561,713	572,947	584,406	596,094	608,016
Expenses	0	230,400	235,008	239,708	244,502	249,392	254,380	259,468	264,657	269,950	275,349	280,856	286,473	292,203	298,047	304,008
Net Operating Income	0	230,400	235,008	239,708	244,502	249,392	254,380	259,468	264,657	269,950	275,349	280,856	286,473	292,203	298,047	304,008
1. Loan Payment	0	27,763	27,763	27,763	27,763	27,763	27,763	27,763	27,763	27,763	27,763	0	0	0	0	0
Payment Interest Part	0	16,686	16,263	15,825	15,369	14,896	14,405	13,896	13,367	12,817	12,247	0	0	0	0	0
Payment Principal Part	0	11,077	11,500	11,939	12,394	12,867	13,358	13,867	14,396	14,946	333,657	0	0	0	0	0
2. Loan Payment	0	395,703	395,703	395,703	395,703	395,703	0	0	0	0	0	0	0	0	0	0
Payment Interest Part	0	328,163	323,997	319,574	314,879	309,894	0	0	0	0	0	0	0	0	0	0
Payment Principal Part	0	67,541	71,706	76,129	80,825	5,203,799	0	0	0	0	0	0	0	0	0	0
Total Debt Service	0	423,466	423,466	423,466	423,466	423,466	27,763	27,763	27,763	27,763	27,763	0	0	0	0	0
Cash Flow
Repairs/Construction	100,000	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-310,000	-193,066	-188,458	-183,758	-178,964	-5,292,064	226,617	231,705	236,894	242,187	-70,554	280,856	286,473	292,203	298,047	304,008
Depreciation	0	125,128	125,128	125,128	125,128	125,128	125,128	125,128	125,128	125,128	125,128	125,128	125,128	125,128	125,128	125,128
Taxes	0	-59,894	-57,595	-55,205	-52,718	-50,131	28,712	30,111	31,541	33,001	34,494	38,932	40,336	41,769	43,230	44,720
Cash Flow After Taxes	-310,000	-133,172	-130,863	-128,554	-126,246	-5,241,932	197,905	201,594	205,353	209,186	-105,048	241,924	246,137	250,434	254,817	259,288

Note: All amounts in the table above are in $

Resale Price Evaluation Methods

The property is sold after 15 years. Below is the resale price calculated using different methods.

Appreciation (3.00%)	$ 9,347,805
Cap Rate (3.84%) & NOI	$ 7,916,872
Gross Rent Multiplier	$ 7,916,366

Sale Proceeds

Projected Selling Price	$ 9,347,805
Costs of Sale (6.00%)	$ 560,868
Net Sale Proceeds Before Tax	$ 8,786,937

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	$ 8,786,937
Investor Cash Outlay	$ 310,000
Net Assets	$ 8,476,937
Average Yield
Annual Net Assets	$ 565,129
Average Cash Flow (After Taxes)	$ -270,564
Average Annual Gain (After Taxes)	$ 294,565
Average Annual Yield (After Taxes)	4.83 %

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: 98040, Inc - Commissary Kitchen WHOLESALE

Property Report :

98040, Inc - Commissary Kitchen

210 S Lucile St, Seattle, WA 98108

Executive Summary

210 S Lucile St, Seattle, WA 98108

A-B Investment

B-C Investment

Total Capital Needed

Total Capital Needed

Operating Analysis

Property Description

Operating Analysis

Annual Property Operating Data

Gross Scheduled Income (GSI)

Gross Scheduled Income (GSI)

Vacancy and Credit Loss

Vacancy and Credit Loss

Gross Operating Income (GOI)

Gross Operating Income (GOI)

Operating Expenses

Operating Expenses

Net Operating Income (NOI)

Net Operating Income (NOI)

Cash Flow (Year 1)

Cash Flow

Cash Flow

Cash Flow

Cash Flow

Operating Ratios

Operating Expense Ratio

Operating Expense Ratio

Break-Even Ratio (BER)

Break-Even Ratio (BER)

Financial Analysis

Financial Measures

Net Present Value (NPV)

Net Present Value (NPV)

Internal Rate of Return (IRR)

Internal Rate of Return (IRR)

Profitability Index

Profitability Index

Investment Return Ratios

Cash on Cash Return

Cash on Cash Return

Return on Investment

Return on Investment

Capitalization Rate

Capitalization Rate

Gross Rental Yield

Gross Rental Yield

Gross Rent Multiplier (GRM)

Gross Rent Multiplier (GRM)

Financing Overview

Loan to Value Ratio

Loan to Value Ratio

Loan to Cost Ratio

Loan to Cost Ratio

Long-term Cash Flow Forecast

Resale Analysis

Resale Price Evaluation Methods

Sale Proceeds

Net Assets and Yield

Photos