2801 Elsbeth Ct, Wake Forest NC 27587

2801 Elsbeth Ct, Wake Forest, NC 27587

Investment strategy: Rental Property

Purchase Price$ 370,000

Rent$ 1,225/mo

Monthly Cash Flow$ 1,024

Cash on Cash Return16.60 %

Financial Analysis

Cash on Cash Return	16.60 %
Internal Rate of Return (IRR)	16.27 %
Capitalization Rate	3.32 %
Gross Rent Multiplier (GRM)	25.17
Debt-coverage Ratio (DCR)	0.00
Operating Expense Ratio (OER)	7.17 %

Financial Breakdown

Purchase Price	$ 370,000
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).	$ 370,000
Financing	$ 296,000
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 74,000
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.	$ 74,000
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.	$ 0

Operating Analysis

Rent	$ 1,225/mo
Gross Operating Income (GOI)	$ 13,230
Total Expenses	$ 948
Net Operating Income (NOI)	$ 12,282
Annual Debt Service	$ 0
Cash Flow Before Taxes (CFBT)	$ 12,282
Income Tax Liability	$ 759
Cash Flow After Taxes (CFAT)	$ 11,523

Purchase Price	$ 370,000
Address	2801 Elsbeth Ct , Wake Forest, 27587, NC

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.	$ 14,700
Total Gross Income	$ 14,700
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.	$ 1,470
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.	$ 13,230	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	$ 948	7.17 %
Total Expenses	$ 948	7.17 %
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.	$ 12,282	92.83 %

Cash Flow (Year 1)

Net Operating Income	$ 12,282	92.83 %
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.	$ 12,282	92.83 %
Income Tax Liability	$ 759	5.74 %
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.	$ 11,523	87.10 %

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).	7.17 %
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.	7.17 %

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.	$ 153,335
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.	16.27 %
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	3.07
Annual Depreciation	$ 10,764

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.	16.60 %
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.	21.60 %
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.	3.32 %
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.	3.97 %
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.	25.17

Financing
Down Payment		$ 74,000
30y		$ 296,000
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		0.00

30y Financing of: Purchase price ($ 370,000)
Type	Amortized
Loan Amount	$ 296,000
Down payment (20%)	$ 74,000
Amortization	30 years
Interest Rate	0.00 %
Monthly Payment	$ 0.00

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	14,700	14,847	14,995	15,145	15,297	15,450	15,604	15,760	15,918	16,077	16,238	16,400	16,564	16,730	16,897	17,066	17,237	17,409	17,583	17,759	17,937	18,116	18,297	18,480	18,665	18,852	19,040	19,231	19,423	19,617
Vacancy Loss	0	1,470	1,485	1,500	1,515	1,530	1,545	1,560	1,576	1,592	1,608	1,624	1,640	1,656	1,673	1,690	1,707	1,724	1,741	1,758	1,776	1,794	1,812	1,830	1,848	1,867	1,885	1,904	1,923	1,942	1,962
Gross Operating Income	0	13,230	13,362	13,496	13,631	13,767	13,905	14,044	14,184	14,326	14,469	14,614	14,760	14,908	15,057	15,208	15,360	15,513	15,668	15,825	15,983	16,143	16,304	16,468	16,632	16,799	16,967	17,136	17,308	17,481	17,655
Expenses	0	948	967	986	1,006	1,026	1,047	1,068	1,089	1,111	1,133	1,156	1,179	1,202	1,226	1,251	1,276	1,301	1,327	1,354	1,381	1,409	1,437	1,466	1,495	1,525	1,555	1,586	1,618	1,651	1,684
Net Operating Income	0	12,282	12,395	12,510	12,625	12,741	12,858	12,976	13,095	13,215	13,336	13,459	13,582	13,706	13,831	13,957	14,084	14,212	14,341	14,471	14,602	14,734	14,868	15,002	15,137	15,274	15,411	15,550	15,689	15,830	15,972
Loan Payment	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
Payment Interest Part	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
Payment Principal Part	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	296,000
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	-74,000	12,282	12,395	12,510	12,625	12,741	12,858	12,976	13,095	13,215	13,336	13,459	13,582	13,706	13,831	13,957	14,084	14,212	14,341	14,471	14,602	14,734	14,868	15,002	15,137	15,274	15,411	15,550	15,689	15,830	15,972
Depreciation	0	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764	10,764
Taxes	0	759	816	873	930	989	1,047	1,106	1,166	1,226	1,286	1,347	1,409	1,471	1,533	1,596	1,660	1,724	1,788	1,854	1,919	1,985	2,052	2,119	2,187	2,255	2,324	2,393	2,463	2,533	2,604
Cash Flow After Taxes	-74,000	11,523	11,580	11,637	11,694	11,753	11,811	11,870	11,930	11,990	12,050	12,111	12,173	12,235	12,297	12,360	12,424	12,488	12,552	12,618	12,683	12,749	12,816	12,883	12,951	13,019	13,088	13,157	13,227	13,297	13,368

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 (1.00%)	$ 498,704
Cap Rate (3.32%) & NOI	$ 481,082
Gross Rent Multiplier	$ 493,764

Sale Proceeds

Projected Selling Price	$ 498,704
Costs of Sale (6.00%)	$ 29,922
1. Loan Balance Payoff	$ 296,000
Net Sale Proceeds Before Tax	$ 172,782

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	$ 172,782
Investor Cash Outlay	$ 74,000
Net Assets	$ 98,782
Average Yield
Annual Net Assets	$ 3,293
Average Cash Flow (After Taxes)	$ 11,965
Average Annual Gain (After Taxes)	$ 15,258
Average Annual Yield (After Taxes)	4.12 %

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: 2801 Elsbeth Ct, Wake Forest RENTAL

Property Report :

2801 Elsbeth Ct, Wake Forest, NC 27587

Executive Summary