2318 9th St, Lake Charles LA 70601

2318 9th St, Lake Charles, LA 70601

3 bedrooms , 2 bathrooms

Year built: 2018, Size: 1300 SF

Investment strategy: Rental Property

Purchase Price$ 143,000

Rent$ 1,300/mo

Monthly Cash Flow$ 275

Cash on Cash Return65.93 %

Financial Analysis

Cash on Cash Return	65.93 %
Internal Rate of Return (IRR)	62.50 %
Capitalization Rate	7.70 %
Gross Rent Multiplier (GRM)	9.17
Debt-coverage Ratio (DCR)	1.43
Operating Expense Ratio (OER)	21.54 %

Financial Breakdown

Purchase Price	$ 143,000
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).	$ 143,000
Financing	$ 137,995
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 5,005
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.	$ 5,005
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	$ 1,300/mo
Gross Operating Income (GOI)	$ 14,040
Total Expenses	$ 3,024
Net Operating Income (NOI)	$ 11,016
Annual Debt Service	$ 7,716
Cash Flow Before Taxes (CFBT)	$ 3,300
Income Tax Liability	$ 414
Cash Flow After Taxes (CFAT)	$ 2,886

Purchase Price	$ 143,000
Address	2318 9th St , Lake Charles, 70601, LA
Year Built	2018
Size	1300 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.	$ 15,600
Total Gross Income	$ 15,600
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.	$ 1,560
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.	$ 14,040	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	$ 1,404	10.00 %
Centauri	$ 750	5.34 %
Lake Charles	$ 870	6.20 %
Total Expenses	$ 3,024	21.54 %
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.	$ 11,016	78.46 %

Cash Flow (Year 1)

Net Operating Income	$ 11,016	78.46 %
Annual Debt Service	$ 7,716	54.96 %
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.	$ 3,300	23.50 %
Income Tax Liability	$ 414	2.95 %
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.	$ 2,886	20.56 %

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).	21.54 %
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.	76.50 %

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.	$ 144,481
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.	62.50 %
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	29.87
Annual Depreciation	$ 4,160

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.	65.93 %
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.	151.65 %
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.	7.70 %
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.	10.91 %
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.	9.17

Financing
Down Payment		$ 5,005
FHA		$ 137,995
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.		96.50 %
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).		96.50 %
Debt Coverage Ratio		1.43

FHA Financing of: Purchase price ($ 143,000)
Type	Amortized
Loan Amount	$ 137,995
Down payment (4%)	$ 5,005
Amortization	30 years
Interest Rate	3.80 %
Monthly Payment	$ 643.00

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	15,600	15,912	16,230	16,555	16,886	17,224	17,568	17,919	18,278	18,643	19,016	19,397	19,785	20,180	20,584	20,996	21,415	21,844	22,281	22,726	23,181	23,644	24,117	24,600	25,092	25,593	26,105	26,627	27,160	27,703
Vacancy Loss	0	1,560	1,591	1,623	1,655	1,689	1,722	1,757	1,792	1,828	1,864	1,902	1,940	1,978	2,018	2,058	2,100	2,142	2,184	2,228	2,273	2,318	2,364	2,412	2,460	2,509	2,559	2,611	2,663	2,716	2,770
Gross Operating Income	0	14,040	14,321	14,607	14,899	15,197	15,501	15,811	16,128	16,450	16,779	17,115	17,457	17,806	18,162	18,525	18,896	19,274	19,659	20,053	20,454	20,863	21,280	21,706	22,140	22,582	23,034	23,495	23,965	24,444	24,933
Expenses	0	3,024	3,084	3,146	3,209	3,273	3,339	3,406	3,474	3,543	3,614	3,686	3,760	3,835	3,912	3,990	4,070	4,151	4,234	4,319	4,405	4,494	4,583	4,675	4,769	4,864	4,961	5,060	5,162	5,265	5,370
Net Operating Income	0	11,016	11,236	11,461	11,690	11,924	12,163	12,406	12,654	12,907	13,165	13,428	13,697	13,971	14,250	14,535	14,826	15,123	15,425	15,734	16,048	16,369	16,697	17,031	17,371	17,719	18,073	18,434	18,803	19,179	19,563
Loan Payment	0	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716	7,716
Payment Interest Part	0	5,200	5,103	5,002	4,897	4,788	4,675	4,557	4,435	4,308	4,176	4,040	3,897	3,750	3,596	3,437	3,272	3,100	2,921	2,736	2,543	2,343	2,135	1,920	1,696	1,463	1,221	970	709	438	157
Payment Principal Part	0	2,516	2,613	2,714	2,819	2,928	3,041	3,159	3,281	3,408	3,540	3,676	3,819	3,966	4,120	4,279	4,444	4,616	4,795	4,980	5,173	5,373	5,581	5,796	6,020	6,253	6,495	6,746	7,007	7,278	7,559
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	-5,005	3,300	3,520	3,745	3,974	4,208	4,447	4,690	4,938	5,191	5,449	5,712	5,981	6,255	6,534	6,819	7,110	7,407	7,709	8,018	8,332	8,653	8,981	9,315	9,655	10,003	10,357	10,718	11,087	11,463	11,847
Depreciation	0	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160	4,160
Taxes	0	414	493	575	658	744	832	922	1,015	1,110	1,207	1,307	1,410	1,515	1,624	1,735	1,849	1,966	2,086	2,209	2,336	2,467	2,600	2,738	2,879	3,024	3,173	3,326	3,484	3,645	3,812
Cash Flow After Taxes	-5,005	2,886	3,027	3,170	3,316	3,464	3,615	3,768	3,923	4,081	4,242	4,405	4,571	4,740	4,911	5,085	5,262	5,441	5,623	5,808	5,996	6,187	6,380	6,577	6,776	6,979	7,184	7,392	7,604	7,818	8,035

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%)	$ 347,099
Cap Rate (7.70%) & NOI	$ 254,062
Gross Rent Multiplier	$ 254,038

Sale Proceeds

Projected Selling Price	$ 347,099
Costs of Sale (3.00%)	$ 10,413
Net Sale Proceeds Before Tax	$ 336,686

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	$ 336,686
Investor Cash Outlay	$ 5,005
Net Assets	$ 331,681
Average Yield
Annual Net Assets	$ 11,056
Average Cash Flow (After Taxes)	$ 5,008
Average Annual Gain (After Taxes)	$ 16,064
Average Annual Yield (After Taxes)	11.23 %

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.

Lender Summary for FHA

Financing of: Purchase price
Type: Amortized
Amortization: 30 years

Loan Assumptions		% of ARV
After Repair Value	$ 0	0.00 %
Purchase Price	$ 143,000	%
Purchase Costs	$ 0	0.00 %
Repair Costs	$ 0	0.00 %
Holding Costs	$ 0	0.00 %
Total Capital Needed Total Capital Needed Includes all projects costs (except selling costs). Total Capital Needed Includes all projects costs (except selling costs).	$ 143,000	%
Financed Amount	$ 143,000	%
Down payment (4%)	$ 5,005	%
Loan Amount	$ 137,995	%

Lender Returns
Interest Rate	3.80 %
Interest Income	$ 93,484
Total Income to Lender	$ 0
Lender's ROI	0.00 %
Lender's Annualized ROI	0.00 %

Property Report: 2318 9th St, Lake Charles RENTAL

Property Report :

2318 9th St, Lake Charles, LA 70601

Executive Summary