443 N Wabash Ave, Bradley IL 60915

443 N Wabash Ave, Bradley, IL 60915

Investment strategy: Rental Property

Purchase Price$ 121,000

Rent$ 1,800/mo

Monthly Cash Flow$ 470

Cash on Cash Return13.93 %

Financial Analysis

Cash on Cash Return	13.93 %
Internal Rate of Return (IRR)	16.85 %
Capitalization Rate	7.07 %
Gross Rent Multiplier (GRM)	11.11
Debt-coverage Ratio (DCR)	1.50
Operating Expense Ratio (OER)	18.99 %
After Repair Value	$ 240,000
Profit/Equity From Rehab	$ 70,674

Financial Breakdown

Purchase Price	$ 121,000
Purchase Costs	$ 8,326
Repair/Construction Costs	$ 40,000
Total Capital Needed Total Capital Needed Includes all projects costs (except selling costs). Total Capital Needed Includes all projects costs (except selling costs).	$ 169,326
Financing	$ 128,800
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 40,526
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.	$ 34,776
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.	$ 5,750

Operating Analysis

Rent	$ 1,800/mo
Gross Operating Income (GOI)	$ 20,952
Total Expenses	$ 3,978
Net Operating Income (NOI)	$ 16,974
Annual Debt Service	$ 11,330
Cash Flow Before Taxes (CFBT)	$ 5,644
Income Tax Liability	$ 800
Cash Flow After Taxes (CFAT)	$ 4,843

Purchase Price	$ 121,000
Address	443 N Wabash Ave , Bradley, 60915, IL

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.	$ 21,600
Total Gross Income	$ 21,600
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.	$ 648
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.	$ 20,952	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).
Insurance	$ 1,500	7.16 %
Property tax	$ 2,478	11.83 %
Total Expenses	$ 3,978	18.99 %
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.	$ 16,974	81.01 %

Cash Flow (Year 1)

Net Operating Income	$ 16,974	81.01 %
Annual Debt Service	$ 11,330	54.08 %
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.	$ 5,644	26.94 %
Income Tax Liability	$ 800	3.82 %
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.	$ 4,843	23.12 %

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).	18.99 %
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.	73.06 %

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.	$ 171,591
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.	16.85 %
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	5.23
Annual Depreciation	$ 3,520

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.	13.93 %
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.	22.88 %
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.	7.07 %
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.	17.85 %
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.	11.11

Financing		% of ARV
Down Payment	$ 32,200	13.42 %
HomeStyle	$ 128,800	53.67 %
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.		106.45 %
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		1.50

HomeStyle Financing of: Purchase + Repairs ($ 161,000)
Type	Amortized
Loan Amount	$ 128,800
Down payment (20%)	$ 32,200
Amortization	30 years
Interest Rate	7.99 %
Monthly Payment	$ 944.19

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	21,600	22,032	22,473	22,922	23,381	23,848	24,325	24,812	25,308	25,814	26,330	26,857	27,394	27,942	28,501	29,071	29,652	30,245	30,850	31,467	32,096	32,738	33,393	34,061	34,742	35,437	36,146	36,869	37,606	38,358
Vacancy Loss	0	648	661	674	688	701	715	730	744	759	774	790	806	822	838	855	872	890	907	926	944	963	982	1,002	1,022	1,042	1,063	1,084	1,106	1,128	1,151
Gross Operating Income	0	20,952	21,371	21,798	22,234	22,679	23,133	23,595	24,067	24,549	25,040	25,540	26,051	26,572	27,104	27,646	28,199	28,763	29,338	29,925	30,523	31,134	31,756	32,391	33,039	33,700	34,374	35,061	35,763	36,478	37,207
Expenses	0	3,978	4,058	4,139	4,221	4,306	4,392	4,480	4,569	4,661	4,754	4,849	4,946	5,045	5,146	5,249	5,354	5,461	5,570	5,682	5,795	5,911	6,029	6,150	6,273	6,398	6,526	6,657	6,790	6,926	7,064
Net Operating Income	0	16,974	17,313	17,660	18,013	18,373	18,741	19,115	19,498	19,888	20,285	20,691	21,105	21,527	21,958	22,397	22,845	23,302	23,768	24,243	24,728	25,222	25,727	26,241	26,766	27,302	27,848	28,405	28,973	29,552	30,143
Loan Payment	0	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330	11,330
Payment Interest Part	0	10,252	10,163	10,066	9,961	9,848	9,725	9,592	9,448	9,292	9,123	8,940	8,742	8,527	8,295	8,043	7,770	7,475	7,156	6,810	6,435	6,029	5,590	5,114	4,599	4,041	3,437	2,782	2,074	1,306	476
Payment Principal Part	0	1,078	1,167	1,264	1,369	1,482	1,605	1,738	1,883	2,039	2,208	2,391	2,589	2,803	3,036	3,287	3,560	3,855	4,174	4,520	4,895	5,301	5,740	6,216	6,731	7,289	7,894	8,548	9,257	10,024	10,855
Cash Flow
Repairs/Construction	40,000	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	-40,526	5,644	5,983	6,329	6,683	7,043	7,410	7,785	8,167	8,557	8,955	9,361	9,775	10,197	10,627	11,067	11,514	11,971	12,437	12,913	13,398	13,892	14,397	14,911	15,436	15,971	16,517	17,074	17,642	18,222	18,813
Depreciation	0	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520	3,520
Taxes	0	800	908	1,018	1,133	1,251	1,374	1,501	1,633	1,769	1,911	2,058	2,211	2,370	2,536	2,708	2,889	3,077	3,273	3,478	3,693	3,918	4,154	4,402	4,662	4,935	5,223	5,526	5,845	6,181	6,537
Cash Flow After Taxes	-40,526	4,843	5,076	5,311	5,550	5,792	6,036	6,284	6,535	6,788	7,045	7,303	7,564	7,827	8,092	8,358	8,626	8,895	9,164	9,434	9,704	9,974	10,242	10,509	10,774	11,036	11,295	11,549	11,798	12,040	12,276

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.

Capitalization (7.07%) & NOI	$ 426,353
Appreciation (3.00%)	$ 582,543
Gross Rent Multiplier	$ 426,160

Sale Proceeds

Projected Selling Price	$ 426,353
Costs of Sale (3.50%)	$ 14,922
Net Sale Proceeds Before Tax	$ 411,431

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	$ 411,431
Investor Cash Outlay	$ 40,526
Net Assets	$ 370,905
Average Yield
Annual Net Assets	$ 12,364
Average Cash Flow (After Taxes)	$ 8,115
Average Annual Gain (After Taxes)	$ 20,478
Average Annual Yield (After Taxes)	16.92 %

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: 443 N Wabash Ave, Bradley RENTAL

Property Report :

443 N Wabash Ave, Bradley, IL 60915

Executive Summary