Maple house 1&2 business only: 410 Pennsylvania Ave. and 2000 Brommer S, Santa Cruz CA 95062

410 Pennsylvania Ave. and 2000 Brommer S, Santa Cruz, CA 95062

Commercial (Special-Purpose):

Investment strategy: Rental Property

Residential Care Facilities For The Elderly
Licensed 22 Beds/11 Units The Maple House I (LIC 445200566) Licensed 40 Beds/22 Units The Maple House II (LIC 445294274)

Purchase Price$ 3,500,000

Rent$ 241,086/mo

Monthly Cash Flow$ 29,850

Cash on Cash Return28.10 %

Financial Analysis

Cash on Cash Return	28.10 %
Internal Rate of Return (IRR)	34.99 %
Capitalization Rate	21.10 %
Gross Rent Multiplier (GRM)	1.21
Debt-coverage Ratio (DCR)	1.94
Operating Expense Ratio (OER)	73.68 %

Financial Breakdown

Purchase Price	$ 3,500,000
Purchase Costs	$ 224,500
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).	$ 3,724,500
Financing	$ 2,450,000
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 1,274,500
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.	$ 1,074,500
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.	$ 200,000

Operating Analysis

Rent	$ 241,086/mo
Gross Operating Income (GOI)	$ 2,806,241
Total Expenses	$ 2,067,614
Net Operating Income (NOI)	$ 738,627
Annual Debt Service	$ 380,429
Cash Flow Before Taxes (CFBT)	$ 358,198
Income Tax Liability	$ 0
Cash Flow After Taxes (CFAT)	$ 358,198

The Maple House I & II are both assisted living facilities for seniors aged 60 and above:
HTTP://www.themaplehouse.com
The Maple House I is located at 410 Pennsylvania Ave., City of Santa Cruz, with lot size of 8730 SF and building size of 4142 SF, It is a homey cozy setting licensed for 22 residents with 11 units and 7 bathrooms. Maple House II is located at 2000 Brommer St, County of Santa Cruz, with lot size of 24,858 SF and building size of 9,008 SF with 22 units and 19 bathrooms. It is more spacious, and licensed for 40 residents. Both are surrounded by nice Santa Cruz neighbor hoods and conveniently located: Hospital and medical clinics are minutes away Senior services, shopping, libraries and churches are nearby. Call buttons, wander guard and security cameras increase peace of mind The facilities are licensed for both ambulatory and non ambulatory residents. Both facilitieswere newly remodeled with upgraded fire sprinkler systems.
The basic services include 24-hour onsite caring staffs, emergency call system, basic medication management and administration, nutritious meals and snacks,companion to dining room or in-room meal services, shower assistance twice a week, daily and weekly house keeping, weekly laundry service, communicating needs with doctors, pharmacies, and related parties, making arrangements for medical, transportation and other needs, supervised daily group activities, and religious services, if desired.
The following additional services are offered: special meal service, wander guard system and services, incontinent management, hospice services, in-room cable or satellite TV, wireless internet, dry-cleaning, professional hair and nail services, and companion services.

Purchase Price	$ 3,500,000
Address	410 Pennsylvania Ave. and 2000 Brommer S , Santa Cruz, 95062, CA
Type	Commercial
Category	Special-Purpose

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.	$ 2,893,032
Total Gross Income	$ 2,893,032
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.	$ 86,791
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.	$ 2,806,241	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 tax	$ 89,000	3.17 %
Rent	$ 450,000	16.04 %
All other Expenses	$ 1,528,614	54.47 %
Total Expenses	$ 2,067,614	73.68 %
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.	$ 738,627	26.32 %

Cash Flow (Year 1)

Net Operating Income	$ 738,627	26.32 %
Annual Debt Service	$ 380,429	13.56 %
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.	$ 358,198	12.76 %
Income Tax Liability	$ 0	0.00 %
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.	$ 358,198	12.76 %

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).	73.68 %
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.	87.24 %

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.	$ 4,506,720
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.	34.99 %
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	4.54
Annual Depreciation	$ 71,795

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.	28.10 %
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.	34.28 %
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.	21.10 %
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.	82.66 %
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.	1.21

Financing
Down Payment		$ 1,050,000
Commercial/ SBA		$ 2,450,000
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.		70.00 %
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).		70.00 %
Debt Coverage Ratio		1.94

Commercial/ SBA Financing of: Purchase price ($ 3,500,000)
Type	Amortized
Loan Amount	$ 2,450,000
Down payment (30%)	$ 1,050,000
Amortization	10 years
Interest Rate	9.50 %
Monthly Payment	$ 31,702.40

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	2,893,032	2,950,893	3,009,910	3,070,109	3,131,511	3,194,141	3,258,024	3,323,184	3,389,648	3,457,441
Vacancy Loss	0	86,791	88,527	90,297	92,103	93,945	95,824	97,741	99,696	101,689	103,723
Gross Operating Income	0	2,806,241	2,862,366	2,919,613	2,978,005	3,037,566	3,098,317	3,160,283	3,223,489	3,287,959	3,353,718
Expenses	0	2,067,614	2,108,966	2,151,146	2,194,169	2,238,052	2,282,813	2,328,469	2,375,039	2,422,539	2,470,990
Net Operating Income	0	738,627	753,400	768,468	783,837	799,514	815,504	831,814	848,450	865,419	882,728
Loan Payment	0	380,429	380,429	380,429	380,429	380,429	380,429	380,429	380,429	380,429	380,429
Payment Interest Part	0	226,147	210,835	194,003	175,501	155,162	132,805	108,229	81,214	51,518	18,874
Payment Principal Part	0	154,282	169,594	186,426	204,928	225,267	247,624	272,200	299,215	328,911	361,555
Cash Flow
Repairs/Construction	0	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-1,274,500	358,198	372,971	388,039	403,408	419,085	435,075	451,385	468,021	484,990	502,299
Depreciation	0	71,795	71,795	71,795	71,795	71,795	71,795	71,795	71,795	71,795	71,795
Taxes	0	0	0	0	0	0	0	0	0	0	0
Cash Flow After Taxes	-1,274,500	358,198	372,971	388,039	403,408	419,085	435,075	451,385	468,021	484,990	502,299

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 (2.25%)	$ 4,372,212
Cap Rate (21.10%) & NOI	$ 4,183,543
Gross Rent Multiplier	$ 4,183,504

Sale Proceeds

Projected Selling Price	$ 4,372,212
Costs of Sale (6.00%)	$ 262,333
Net Sale Proceeds Before Tax	$ 4,109,879

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	$ 4,109,879
Investor Cash Outlay	$ 1,274,500
Net Assets	$ 2,835,379
Average Yield
Annual Net Assets	$ 283,538
Average Cash Flow (After Taxes)	$ 378,117
Average Annual Gain (After Taxes)	$ 661,655
Average Annual Yield (After Taxes)	18.90 %

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: Maple house 1&2 business only RENTAL

Property Report :

Maple house 1&2 business only

410 Pennsylvania Ave. and 2000 Brommer S, Santa Cruz, CA 95062

Executive Summary

410 Pennsylvania Ave. and 2000 Brommer S, Santa Cruz, CA 95062

Financial Analysis

Financial Breakdown

Total Capital Needed

Total Capital Needed

Cash out of Pocket

Cash out of Pocket

Cash at Closing

Cash at Closing

Cash During Rehab

Cash During Rehab

Operating Analysis

Property Description

Operating Analysis

Annual Property Operating Data

Gross Scheduled Income (GSI)

Gross Scheduled Income (GSI)

Vacancy and Credit Loss

Vacancy and Credit Loss

Gross Operating Income (GOI)

Gross Operating Income (GOI)

Operating Expenses

Operating Expenses

Net Operating Income (NOI)

Net Operating Income (NOI)

Cash Flow (Year 1)

Cash Flow

Cash Flow

Cash Flow

Cash Flow

Operating Ratios

Operating Expense Ratio

Operating Expense Ratio

Break-Even Ratio (BER)

Break-Even Ratio (BER)

Financial Analysis

Financial Measures

Net Present Value (NPV)

Net Present Value (NPV)

Internal Rate of Return (IRR)

Internal Rate of Return (IRR)

Profitability Index

Profitability Index

Investment Return Ratios

Cash on Cash Return

Cash on Cash Return

Return on Investment

Return on Investment

Capitalization Rate

Capitalization Rate

Gross Rental Yield

Gross Rental Yield

Gross Rent Multiplier (GRM)

Gross Rent Multiplier (GRM)

Financing Overview

Loan to Value Ratio

Loan to Value Ratio

Loan to Cost Ratio

Loan to Cost Ratio

Long-term Cash Flow Forecast

Resale Analysis

Resale Price Evaluation Methods

Sale Proceeds

Net Assets and Yield