355 West Cedar Grove Rd Irvine, KY 40336, Irvine 40336

355 West Cedar Grove Rd Irvine, KY 40336, Irvine, 40336

Investment strategy: Rental Property

Purchase Price$ 490,000

Rent$ 4,500/mo

Monthly Cash Flow$ 1,000

Cash on Cash Return46.15 %

Financial Analysis

Cash on Cash Return	46.15 %
Internal Rate of Return (IRR)	52.37 %
Capitalization Rate	8.57 %
Gross Rent Multiplier (GRM)	9.07
Debt-coverage Ratio (DCR)	1.40
Operating Expense Ratio (OER)	20.66 %

Financial Breakdown

Purchase Price	$ 490,000
Purchase Costs	$ 1,500
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).	$ 491,500
Financing	$ 465,500
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 26,000
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.	$ 24,500
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.	$ 1,500

Operating Analysis

Rent	$ 4,500/mo
Gross Operating Income (GOI)	$ 52,920
Total Expenses	$ 10,934
Net Operating Income (NOI)	$ 41,986
Annual Debt Service	$ 29,987
Cash Flow Before Taxes (CFBT)	$ 12,000
Income Tax Liability	$ 1,153
Cash Flow After Taxes (CFAT)	$ 10,846

Purchase Price	$ 490,000
Address	355 West Cedar Grove Rd Irvine, KY 40336 , Irvine, 40336

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.	$ 54,000
Total Gross Income	$ 54,000
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.	$ 1,080
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.	$ 52,920	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	$ 4,234	8.00 %
Insurance	$ 1,700	3.21 %
Property tax	$ 5,000	9.45 %
Total Expenses	$ 10,934	20.66 %
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.	$ 41,986	79.34 %

Cash Flow (Year 1)

Net Operating Income	$ 41,986	79.34 %
Annual Debt Service	$ 29,987	56.66 %
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.	$ 12,000	22.67 %
Income Tax Liability	$ 1,153	2.18 %
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.	$ 10,846	20.50 %

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).	20.66 %
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.	77.33 %

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.	$ 231,208
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.	52.37 %
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	9.89
Annual Depreciation	$ 14,255

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.	46.15 %
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.	102.69 %
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.	8.57 %
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.	11.02 %
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.	9.07

Financing
Down Payment		$ 24,500
Loan		$ 465,500
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.		95.00 %
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).		95.00 %
Debt Coverage Ratio		1.40

Loan Financing of: Purchase price ($ 490,000)
Type	Amortized
Loan Amount	$ 465,500
Down payment (5%)	$ 24,500
Amortization	30 years
Interest Rate	5.00 %
Monthly Payment	$ 2,498.90

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	54,000	55,080	56,182	57,305	58,451	59,620	60,813	62,029	63,270	64,535
Vacancy Loss	0	1,080	1,102	1,124	1,146	1,169	1,192	1,216	1,241	1,265	1,291
Gross Operating Income	0	52,920	53,978	55,058	56,159	57,282	58,428	59,597	60,788	62,004	63,244
Expenses	0	10,934	11,152	11,375	11,603	11,835	12,072	12,313	12,559	12,810	13,067
Net Operating Income	0	41,986	42,826	43,683	44,556	45,447	46,356	47,284	48,229	49,194	50,178
Loan Payment	0	29,987	29,987	29,987	29,987	29,987	29,987	29,987	29,987	29,987	29,987
Payment Interest Part	0	23,119	22,768	22,398	22,010	21,602	21,173	20,722	20,248	19,750	19,226
Payment Principal Part	0	6,868	7,219	7,589	7,977	8,385	8,814	9,265	9,739	10,237	10,761
Cash Flow
Repairs/Construction	0	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-26,000	12,000	12,839	13,696	14,569	15,461	16,370	17,297	18,242	19,207	20,191
Depreciation	0	14,255	14,255	14,255	14,255	14,255	14,255	14,255	14,255	14,255	14,255
Taxes	0	1,153	1,451	1,757	2,073	2,398	2,732	3,077	3,432	3,797	4,174
Cash Flow After Taxes	-26,000	10,846	11,388	11,938	12,497	13,063	13,637	14,220	14,811	15,410	16,017

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%)	$ 658,519
Cap Rate (8.57%) & NOI	$ 585,503
Gross Rent Multiplier	$ 585,332

Sale Proceeds

Projected Selling Price	$ 658,519
Costs of Sale (4.00%)	$ 26,341
1. Loan Balance Payoff	$ 378,647
Net Sale Proceeds Before Tax	$ 253,531

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	$ 253,531
Investor Cash Outlay	$ 26,000
Net Assets	$ 227,531
Average Yield
Annual Net Assets	$ 22,753
Average Cash Flow (After Taxes)	$ 11,781
Average Annual Gain (After Taxes)	$ 34,534
Average Annual Yield (After Taxes)	7.05 %

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: 355 West Cedar Grove Rd Irvine, KY 40336, Irvine RENTAL

Property Report :

355 West Cedar Grove Rd Irvine, KY 40336, Irvine, 40336

Executive Summary