24134 State Route 53 Highway, Elwood IL 60421

24134 State Route 53 Highway, Elwood, IL 60421

Commercial:

Year built: 1950, Size: 90000 SF

Investment strategy: Rental Property

Purchase Price$ 685,000

Rent$ 9,000/mo

Monthly Cash Flow$ 6,013

Cash on Cash Return9.13 %

Financial Analysis

Cash on Cash Return	9.13 %
Internal Rate of Return (IRR)	10.20 %
Capitalization Rate	8.49 %
Gross Rent Multiplier (GRM)	7.87
Debt-coverage Ratio (DCR)	0.00
Operating Expense Ratio (OER)	31.12 %
After Repair Value	$ 850,000
Profit/Equity From Rehab	$ 60,000

Financial Breakdown

Purchase Price	$ 685,000
Purchase Costs	$ 5,000
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).	$ 790,000
Financing	$ 0
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 790,000
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.	$ 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.	$ 790,000

Operating Analysis

Rent	$ 9,000/mo
Gross Operating Income (GOI)	$ 104,760
Total Expenses	$ 32,606
Net Operating Income (NOI)	$ 72,154
Annual Debt Service	$ 0
Cash Flow Before Taxes (CFBT)	$ 72,154
Income Tax Liability	$ 14,526
Cash Flow After Taxes (CFAT)	$ 57,628

INVESTORS LOOK AT THIS CASH COW! ON 2.6 ACRES OF COMMERCIAL PROPERTY WITH RESIDENTIAL PROPERTIES. LOCATED ON RT 53 AND ONLY 1/2 MILE FROM CHICAGOLAND SPEEDWAY. CURRENTLY HAS 3 SINGLE FAMILY HOMES, A DUPLEX APARTMENT ALL FULLY RENTED, 3 POLE BUILDINGS 42X60, 40X60 & 32X75 ALL WITH HEATED WORKSHOPS, 3 GARAGES AND A LOT MORE. IN-GROUND POOL, CITY WATER & SEWER.

Purchase Price	$ 685,000
Address	24134 State Route 53 Highway , Elwood, 60421, IL
MLS^® #	11717325
Year Built	1950
Type	Commercial
Size	90000 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.	$ 108,000
Total Gross Income	$ 108,000
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.	$ 3,240
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.	$ 104,760	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).
Utilities	$ 14,400	13.75 %
Insurance	$ 2,500	2.39 %
Repairs	$ 2,095	2.00 %
Snow/Grass	$ 2,400	2.29 %
Property tax	$ 11,211	10.70 %
Total Expenses	$ 32,606	31.12 %
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.	$ 72,154	68.88 %

Cash Flow (Year 1)

Net Operating Income	$ 72,154	68.88 %
Annual Debt Service	$ 0	0.00 %
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.	$ 72,154	68.88 %
Income Tax Liability	$ 14,526	13.87 %
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.	$ 57,628	55.01 %

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).	31.12 %
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.	31.12 %

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.	$ 360,782
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.	10.20 %
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	1.46
Annual Depreciation	$ 14,051

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.	9.13 %
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.	11.73 %
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.	8.49 %
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.	15.77 %
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.	7.87

There is no financing selected in this deal.

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	108,000	110,160	112,363	114,610	116,903	119,241	121,626	124,058	126,539	129,070
Vacancy Loss	0	3,240	3,305	3,371	3,438	3,507	3,577	3,649	3,722	3,796	3,872
Gross Operating Income	0	104,760	106,855	108,992	111,172	113,396	115,663	117,977	120,336	122,743	125,198
Expenses	0	32,606	33,258	33,923	34,602	35,294	36,000	36,720	37,454	38,203	38,967
Net Operating Income	0	72,154	73,597	75,069	76,570	78,102	79,664	81,257	82,882	84,540	86,230
Cash Flow
Repairs/Construction	100,000	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-790,000	72,154	73,597	75,069	76,570	78,102	79,664	81,257	82,882	84,540	86,230
Depreciation	0	14,051	14,051	14,051	14,051	14,051	14,051	14,051	14,051	14,051	14,051
Taxes	0	14,526	14,886	15,254	15,630	16,013	16,403	16,801	17,208	17,622	18,045
Cash Flow After Taxes	-790,000	57,628	58,710	59,814	60,940	62,089	63,260	64,455	65,674	66,917	68,186

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%)	$ 1,142,329
Cap Rate (8.49%) & NOI	$ 1,015,671
Gross Rent Multiplier	$ 1,015,781

Sale Proceeds

Projected Selling Price	$ 1,142,329
Costs of Sale (4.50%)	$ 51,405
Net Sale Proceeds Before Tax	$ 1,090,924

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	$ 1,090,924
Investor Cash Outlay	$ 790,000
Net Assets	$ 300,924
Average Yield
Annual Net Assets	$ 30,092
Average Cash Flow (After Taxes)	$ 55,949
Average Annual Gain (After Taxes)	$ 86,041
Average Annual Yield (After Taxes)	12.56 %

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: 24134 State Route 53 Highway, Elwood RENTAL

Property Report :

24134 State Route 53 Highway, Elwood, IL 60421

Executive Summary