4507 Maplecrest Ave, Parma OH 44134

4507 Maplecrest Ave, Parma, OH 44134

Investment strategy: Rental Property

Purchase Price$ 99,000

Rent$ 815/mo

Monthly Cash Flow$ 93

Cash on Cash Return5.66 %

Financial Analysis

Cash on Cash Return	5.66 %
Internal Rate of Return (IRR)	9.16 %
Capitalization Rate	5.72 %
Gross Rent Multiplier (GRM)	10.12
Debt-coverage Ratio (DCR)	1.25
Operating Expense Ratio (OER)	35.72 %

Financial Breakdown

Purchase Price	$ 99,000
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).	$ 99,000
Financing	$ 79,200
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 19,800
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.	$ 19,800
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	$ 815/mo
Gross Operating Income (GOI)	$ 8,802
Total Expenses	$ 3,144
Net Operating Income (NOI)	$ 5,658
Annual Debt Service	$ 4,537
Cash Flow Before Taxes (CFBT)	$ 1,121
Income Tax Liability	$ -182
Cash Flow After Taxes (CFAT)	$ 1,303

Purchase Price	$ 99,000
Address	4507 Maplecrest Ave , Parma, 44134, OH

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.	$ 9,780
Total Gross Income	$ 9,780
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.	$ 978
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.	$ 8,802	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	10.77 %
Property tax	$ 2,196	24.95 %
Total Expenses	$ 3,144	35.72 %
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.	$ 5,658	64.28 %

Cash Flow (Year 1)

Net Operating Income	$ 5,658	64.28 %
Annual Debt Service	$ 4,537	51.55 %
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.	$ 1,121	12.73 %
Income Tax Liability	$ -182	-2.07 %
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.	$ 1,303	14.80 %

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).	35.72 %
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.	87.27 %

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.	$ 24,182
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.	9.16 %
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	2.22
Annual Depreciation	$ 2,880

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.	5.66 %
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.	10.66 %
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.	5.72 %
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.	9.88 %
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.	10.12

Financing
Down Payment		$ 19,800
30y		$ 79,200
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		1.25

30y Financing of: Purchase price ($ 99,000)
Type	Amortized
Loan Amount	$ 79,200
Down payment (20%)	$ 19,800
Amortization	30 years
Interest Rate	4.00 %
Monthly Payment	$ 378.11

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	9,780	9,878	9,977	10,076	10,177	10,279	10,382	10,485	10,590	10,696	10,803	10,911	11,020	11,131	11,242	11,354	11,468	11,582	11,698	11,815	11,933	12,053	12,173	12,295	12,418	12,542	12,668	12,794	12,922	13,051
Vacancy Loss	0	978	988	998	1,008	1,018	1,028	1,038	1,049	1,059	1,070	1,080	1,091	1,102	1,113	1,124	1,135	1,147	1,158	1,170	1,182	1,193	1,205	1,217	1,230	1,242	1,254	1,267	1,279	1,292	1,305
Gross Operating Income	0	8,802	8,890	8,979	9,069	9,159	9,251	9,343	9,437	9,531	9,627	9,723	9,820	9,918	10,017	10,118	10,219	10,321	10,424	10,528	10,634	10,740	10,847	10,956	11,066	11,176	11,288	11,401	11,515	11,630	11,746
Expenses	0	3,144	3,207	3,271	3,336	3,403	3,471	3,541	3,611	3,684	3,757	3,833	3,909	3,987	4,067	4,148	4,231	4,316	4,402	4,490	4,580	4,672	4,765	4,861	4,958	5,057	5,158	5,261	5,366	5,474	5,583
Net Operating Income	0	5,658	5,683	5,708	5,732	5,756	5,780	5,803	5,825	5,848	5,869	5,890	5,911	5,931	5,950	5,969	5,987	6,005	6,022	6,038	6,054	6,068	6,082	6,095	6,108	6,119	6,130	6,140	6,148	6,156	6,163
Loan Payment	0	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537	4,537
Payment Interest Part	0	3,143	3,086	3,027	2,965	2,901	2,834	2,765	2,693	2,618	2,539	2,458	2,373	2,285	2,193	2,098	1,999	1,895	1,787	1,675	1,559	1,437	1,311	1,180	1,043	901	752	598	438	271	97
Payment Principal Part	0	1,395	1,452	1,511	1,572	1,636	1,703	1,772	1,845	1,920	1,998	2,079	2,164	2,252	2,344	2,439	2,539	2,642	2,750	2,862	2,979	3,100	3,226	3,358	3,494	3,637	3,785	3,939	4,100	4,267	4,441
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	-19,800	1,121	1,146	1,171	1,195	1,219	1,242	1,265	1,288	1,310	1,332	1,353	1,374	1,394	1,413	1,432	1,450	1,468	1,485	1,501	1,516	1,531	1,545	1,558	1,570	1,582	1,593	1,602	1,611	1,619	1,626
Depreciation	0	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880	2,880
Taxes	0	-182	-141	-99	-56	-12	33	79	126	175	225	276	329	383	438	496	554	615	677	741	807	875	946	1,018	1,092	1,169	1,249	1,331	1,415	1,503	1,593
Cash Flow After Taxes	-19,800	1,303	1,287	1,270	1,251	1,231	1,210	1,187	1,162	1,135	1,107	1,077	1,045	1,011	975	936	896	853	807	759	709	656	599	540	478	413	344	272	196	116	33

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%)	$ 133,437
Cap Rate (5.72%) & NOI	$ 107,745
Gross Rent Multiplier	$ 132,080

Sale Proceeds

Projected Selling Price	$ 133,437
Costs of Sale (6.00%)	$ 8,006
Net Sale Proceeds Before Tax	$ 125,431

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	$ 125,431
Investor Cash Outlay	$ 19,800
Net Assets	$ 105,631
Average Yield
Annual Net Assets	$ 3,521
Average Cash Flow (After Taxes)	$ 827
Average Annual Gain (After Taxes)	$ 4,348
Average Annual Yield (After Taxes)	4.39 %

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: 4507 Maplecrest Ave, Parma RENTAL

Property Report :

4507 Maplecrest Ave, Parma, OH 44134

Executive Summary