3559 Lower Honoapiilani Rd, Lahaina HI 96761

3559 Lower Honoapiilani Rd, Lahaina, HI 96761

Condominium:

Investment strategy: Rental Property

Purchase Price$ 104,000

Rent$ 6,000/mo

Monthly Cash Flow$ -63,157

Cash on Cash Return-688.99 %

Financial Analysis

Cash on Cash Return	-688.99 %
Internal Rate of Return (IRR)	N/A
Capitalization Rate	-728.74 %
Gross Rent Multiplier (GRM)	1.44
Debt-coverage Ratio (DCR)	0.00
Operating Expense Ratio (OER)	1,208.02 %

Financial Breakdown

Purchase Price	$ 104,000
Purchase Costs	$ 3,000
Repair/Construction Costs	$ 3,000
Total Capital Needed Total Capital Needed Includes all projects costs (except selling costs). Total Capital Needed Includes all projects costs (except selling costs).	$ 110,000
Financing	$ 0
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 110,000
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.	$ 110,000

Operating Analysis

Rent	$ 6,000/mo
Gross Operating Income (GOI)	$ 68,400
Total Expenses	$ 826,285
Net Operating Income (NOI)	$ -757,885
Annual Debt Service	$ 0
Cash Flow Before Taxes (CFBT)	$ -757,885
Income Tax Liability	$ -190,228
Cash Flow After Taxes (CFAT)	$ -567,658

Purchase Price	$ 104,000
Address	3559 Lower Honoapiilani Rd , Lahaina, 96761, HI
Type	Condominium

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.	$ 72,000
Total Gross Income	$ 72,000
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.	$ 3,600
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.	$ 68,400	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	$ 2,400	3.51 %
Insurance	$ 150	0.22 %
LH	$ 820,800	1,200.00 %
HOA	$ 835	1.22 %
Prop Tax	$ 2,100	3.07 %
Total Expenses	$ 826,285	1,208.02 %
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.	$ -757,885	-1,108.02 %

Cash Flow (Year 1)

Net Operating Income	$ -757,885	-1,108.02 %
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.	$ -757,885	-1,108.02 %
Income Tax Liability	$ -190,228	-278.11 %
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.	$ -567,658	-829.91 %

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).	1,208.02 %
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.	1,208.02 %

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.	$ -6,709,916
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.	N/A
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	-60.00
Annual Depreciation	$ 3,025

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.	-688.99 %
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.	-686.15 %
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.	-728.74 %
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.	69.23 %
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.	1.44

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	11	12	13	14	15
Operational Analysis
Gross Scheduled Income	0	72,000	73,440	74,909	76,407	77,935	79,494	81,084	82,705	84,359	86,047	87,768	89,523	91,313	93,140	95,002
Vacancy Loss	0	3,600	3,672	3,745	3,820	3,897	3,975	4,054	4,135	4,218	4,302	4,388	4,476	4,566	4,657	4,750
Gross Operating Income	0	68,400	69,768	71,163	72,587	74,038	75,519	77,030	78,570	80,142	81,744	83,379	85,047	86,748	88,483	90,252
Expenses	0	826,285	842,811	859,667	876,860	894,397	912,285	930,531	949,142	968,125	987,487	1,007,237	1,027,382	1,047,929	1,068,888	1,090,265
Net Operating Income	0	-757,885	-773,043	-788,504	-804,274	-820,359	-836,766	-853,502	-870,572	-887,983	-905,743	-923,858	-942,335	-961,181	-980,405	-1,000,013
Cash Flow
Repairs/Construction	3,000	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-110,000	-757,885	-773,043	-788,504	-804,274	-820,359	-836,766	-853,502	-870,572	-887,983	-905,743	-923,858	-942,335	-961,181	-980,405	-1,000,013
Depreciation	0	3,025	3,025	3,025	3,025	3,025	3,025	3,025	3,025	3,025	3,025	3,025	3,025	3,025	3,025	3,025
Taxes	0	-190,228	-194,017	-197,882	-201,825	-205,846	-209,948	-214,132	-218,399	-222,752	-227,192	-231,721	-236,340	-241,052	-245,858	-250,760
Cash Flow After Taxes	-110,000	-567,658	-579,026	-590,621	-602,449	-614,513	-626,818	-639,370	-652,172	-665,231	-678,551	-692,137	-705,995	-720,130	-734,548	-749,254

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%)	$ 162,029
Cap Rate (-728.74%) & NOI	$ 137,225
Gross Rent Multiplier	$ 136,804

Sale Proceeds

Projected Selling Price	$ 162,029
Costs of Sale (6.00%)	$ 9,722
Net Sale Proceeds Before Tax	$ 152,307

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	$ 152,307
Investor Cash Outlay	$ 110,000
Net Assets	$ 42,307
Average Yield
Annual Net Assets	$ 2,820
Average Cash Flow (After Taxes)	$ -604,615
Average Annual Gain (After Taxes)	$ -601,794
Average Annual Yield (After Taxes)	-578.65 %

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: 3559 Lower Honoapiilani Rd, Lahaina RENTAL

Property Report :

3559 Lower Honoapiilani Rd, Lahaina, HI 96761

Executive Summary