4755 21st Ave NE, Seattle WA 98105

4755 21st Ave NE, Seattle, WA 98105

Singlefamily:

Year built: 1921,

Investment strategy: Rental Property

Purchase Price$ 565,000

Rent$ 8,000/mo

Monthly Cash Flow$ 6,432

Cash on Cash Return52.42 %

Financial Analysis

Cash on Cash Return	52.42 %
Internal Rate of Return (IRR)	43.98 %
Capitalization Rate	13.66 %
Gross Rent Multiplier (GRM)	5.89
Debt-coverage Ratio (DCR)	0.00
Operating Expense Ratio (OER)	17.11 %

Financial Breakdown

Purchase Price	$ 565,000
Purchase Costs	$ 6,000
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).	$ 571,000
Financing	$ 423,750
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 147,250
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.	$ 141,250
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.	$ 6,000

Operating Analysis

Rent	$ 8,000/mo
Gross Operating Income (GOI)	$ 93,120
Total Expenses	$ 15,931
Net Operating Income (NOI)	$ 77,189
Annual Debt Service	$ 0
Cash Flow Before Taxes (CFBT)	$ 77,189
Income Tax Liability	$ 15,188
Cash Flow After Taxes (CFAT)	$ 62,001

4755 21st Ave Ne, Seattle, WA 98105 is a single family home built in 1921. This property was last sold for $565,000 in 2005 and currently has an estimated value of $1,451,500. Nearby schools include Eckstein Middle School, Laurelhurst Elementary School and Roosevelt High School.

Purchase Price	$ 565,000
Address	4755 21st Ave NE , Seattle, 98105, WA
Year Built	1921
Type	Singlefamily

Property History

Date	Price	Change	Event
5/10/2005
12/11/2002

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.	$ 96,000
Total Gross Income	$ 96,000
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.	$ 2,880
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.	$ 93,120	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	$ 931	1.00 %
Insurance	$ 4,000	4.30 %
Property tax	$ 11,000	11.81 %
Total Expenses	$ 15,931	17.11 %
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.	$ 77,189	82.89 %

Cash Flow (Year 1)

Net Operating Income	$ 77,189	82.89 %
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.	$ 77,189	82.89 %
Income Tax Liability	$ 15,188	16.31 %
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.	$ 62,001	66.58 %

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).	17.11 %
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.	17.11 %

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.	$ 1,237,101
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.	43.98 %
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	9.40
Annual Depreciation	$ 16,436

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.	52.42 %
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.	63.93 %
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.	13.66 %
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.	16.99 %
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.	5.89

Financing
Down Payment		$ 141,250
Gottesman - 2005 Loan		$ 423,750
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.		75.00 %
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).		75.00 %
Debt Coverage Ratio		0.00

Gottesman - 2005 Loan Financing of: Purchase price ($ 565,000)
Type	Amortized
Loan Amount	$ 423,750
Down payment (25%)	$ 141,250
Amortization	30 years
Interest Rate	0.00 %
Monthly Payment	$ 0.00

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	96,000	97,920	99,878	101,876	103,913	105,992	108,112	110,274	112,479	114,729	117,023	119,364	121,751	124,186	126,670	129,203	131,787	134,423	137,112	139,854	142,651	145,504	148,414	151,382	154,410	157,498	160,648	163,861	167,138	170,481
Vacancy Loss	0	2,880	2,938	2,996	3,056	3,117	3,180	3,243	3,308	3,374	3,442	3,511	3,581	3,653	3,726	3,800	3,876	3,954	4,033	4,113	4,196	4,280	4,365	4,452	4,541	4,632	4,725	4,819	4,916	5,014	5,114
Gross Operating Income	0	93,120	94,982	96,882	98,820	100,796	102,812	104,868	106,966	109,105	111,287	113,513	115,783	118,099	120,461	122,870	125,327	127,834	130,391	132,998	135,658	138,371	141,139	143,962	146,841	149,778	152,773	155,829	158,945	162,124	165,367
Expenses	0	15,931	16,250	16,575	16,906	17,244	17,589	17,941	18,300	18,666	19,039	19,420	19,808	20,205	20,609	21,021	21,441	21,870	22,308	22,754	23,209	23,673	24,146	24,629	25,122	25,624	26,137	26,660	27,193	27,737	28,291
Net Operating Income	0	77,189	78,733	80,307	81,913	83,552	85,223	86,927	88,666	90,439	92,248	94,093	95,975	97,894	99,852	101,849	103,886	105,964	108,083	110,245	112,450	114,699	116,992	119,332	121,719	124,153	126,636	129,169	131,753	134,388	137,075
Loan Payment	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
Payment Interest Part	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
Payment Principal Part	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	423,750
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	-147,250	77,189	78,733	80,307	81,913	83,552	85,223	86,927	88,666	90,439	92,248	94,093	95,975	97,894	99,852	101,849	103,886	105,964	108,083	110,245	112,450	114,699	116,992	119,332	121,719	124,153	126,636	129,169	131,753	134,388	137,075
Depreciation	0	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436	16,436
Taxes	0	15,188	15,574	15,968	16,369	16,779	17,197	17,623	18,057	18,501	18,953	19,414	19,885	20,365	20,854	21,353	21,862	22,382	22,912	23,452	24,003	24,566	25,139	25,724	26,321	26,929	27,550	28,183	28,829	29,488	30,160
Cash Flow After Taxes	-147,250	62,001	63,158	64,339	65,544	66,773	68,026	69,304	70,608	71,938	73,295	74,679	76,090	77,530	78,998	80,496	82,023	83,582	85,171	86,792	88,446	90,133	91,853	93,608	95,398	97,224	99,086	100,986	102,923	104,900	106,915

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 (3.00%)	$ 1,371,403
Cap Rate (13.66%) & NOI	$ 1,003,480
Gross Rent Multiplier	$ 1,004,134

Sale Proceeds

Projected Selling Price	$ 1,371,403
Costs of Sale (6.00%)	$ 82,284
1. Loan Balance Payoff	$ 423,750
Net Sale Proceeds Before Tax	$ 865,369

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	$ 865,369
Investor Cash Outlay	$ 147,250
Net Assets	$ 718,119
Average Yield
Annual Net Assets	$ 23,937
Average Cash Flow (After Taxes)	$ 78,830
Average Annual Gain (After Taxes)	$ 102,767
Average Annual Yield (After Taxes)	18.19 %

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: 4755 21st Ave NE, Seattle RENTAL

Property Report :

4755 21st Ave NE, Seattle, WA 98105

Executive Summary