506 Hollywood Ave, Ho Ho Kus NJ 07423

506 Hollywood Ave, Ho Ho Kus, NJ 07423

Singlefamily: 4 bedrooms , 2 bathrooms

Year built: 1951,

Investment strategy: Rental Property

Purchase Price$ 679,000

Rent$ 3,088/mo

Monthly Cash Flow$ -174

Cash on Cash Return-0.74 %

Financial Analysis

Cash on Cash Return	-0.74 %
Internal Rate of Return (IRR)	7.35 %
Capitalization Rate	2.73 %
Gross Rent Multiplier (GRM)	18.32
Debt-coverage Ratio (DCR)	0.90
Operating Expense Ratio (OER)	50.00 %

Financial Breakdown

Purchase Price	$ 679,000
Purchase Costs	$ 7,790
Repair/Construction Costs	$ 2,500
Total Capital Needed Total Capital Needed Includes all projects costs (except selling costs). Total Capital Needed Includes all projects costs (except selling costs).	$ 689,290
Financing	$ 407,400
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 281,890
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.	$ 271,600
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.	$ 10,290

Operating Analysis

Rent	$ 3,088/mo
Gross Operating Income (GOI)	$ 37,056
Total Expenses	$ 18,528
Net Operating Income (NOI)	$ 18,528
Annual Debt Service	$ 20,611
Cash Flow Before Taxes (CFBT)	$ -2,083
Income Tax Liability	$ -3,333
Cash Flow After Taxes (CFAT)	$ 1,249

CHARMING 4 BR, 2 FULL BATH IN BERGEN COUNTY'S MOST SOUGHT AFTER TOWN! MOVE IN READY AND A MUST GET INSIDE TO BELIEVE SPACE! GREAT FLOW W/ UPDATED EAT-IN KITCHEN W/ MODERN CABINETS, STAINLESS STEEL APPLIANCES AND CHARMING BFAST NOOK OVERLOOKING BEAUTIFUL DEEP REAR YARD WITH AN ADJACENT FAMILY ROOM, LR W/ WOOD-BURNING FPL & DR W/ HW FLOORS THROUGHOUT. FIRST FLR BR W/ GREAT CLOSET SPACE & UPDATED HALL BTH W/ WAINSCOTTING & JACUZZI TUB. UPSTAIRS INCLUDES A COZY LANDING W/ BUILT INS & BENCH SEAT OVERLOOKING REAR YD. 3 BEDROOMS INCL MSTR W/ DRESSING AREA. HALL BTH W/ PRETTY DOUBLE VANITY, SKYLIGHT & MANY UPDATES. FULL, FINISHED BSMNT W/ GREAT REC ROOM, ETC.ALSO A LG LAUNDRY ROOM W/ WALLS OF SHELVES & AN ADJACENT UTILITIES/STORAGE ROOM.BILCO DOORS OUT TO REAR YARD, 162 DEEP & VERY PRIVATE. PRETTY PATIO AREA & FULLY FENCED YARD. CIRCULAR DRIVEWAY FOR EASY ACCESS. ALL THIS & CLOSE TO NYC TRANSPORTATION.

Purchase Price	$ 679,000
Address	506 Hollywood Ave , Ho Ho Kus, 07423, NJ
MLS^® #	21023060
Listing Agent	Michael Casale
Listing Broker	Keller Williams Valley Realty
Year Built	1951
Type	Singlefamily
Bedrooms	4
Bathrooms	2

Property History

Date	Price	Change	Event
7/12/2013
1/25/2010
8/14/2003
4/16/1997

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.	$ 37,056
Total Gross Income	$ 37,056
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.	$ 0
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.	$ 37,056	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).
50% rule	$ 18,528	50.00 %
Total Expenses	$ 18,528	50.00 %
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.	$ 18,528	50.00 %

Cash Flow (Year 1)

Net Operating Income	$ 18,528	50.00 %
Annual Debt Service	$ 20,611	55.62 %
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.	$ -2,083	-5.62 %
Income Tax Liability	$ -3,333	-8.99 %
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.	$ 1,249	3.37 %

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).	50.00 %
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.	105.62 %

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.	$ 53,572
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.	7.35 %
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	1.19
Annual Depreciation	$ 19,753

Holding period of 8 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.	-0.74 %
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.	6.49 %
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.	2.73 %
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.	5.46 %
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.	18.32

Financing
Down Payment		$ 271,600
Loan		$ 407,400
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.		60.00 %
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).		59.78 %
Debt Coverage Ratio		0.90

Loan Financing of: Purchase price ($ 679,000)
Type	Amortized
Loan Amount	$ 407,400
Down payment (40%)	$ 271,600
Amortization	30 years
Interest Rate	3.00 %
Monthly Payment	$ 1,717.61

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
Operational Analysis
Gross Scheduled Income	0	37,056	37,797	38,553	39,324	40,111	40,913	41,731	42,566
Vacancy Loss	0	0	0	0	0	0	0	0	0
Gross Operating Income	0	37,056	37,797	38,553	39,324	40,111	40,913	41,731	42,566
Expenses	0	18,528	18,899	19,277	19,662	20,055	20,456	20,866	21,283
Net Operating Income	0	18,528	18,899	19,277	19,662	20,055	20,456	20,866	21,283
Loan Payment	0	20,611	20,611	20,611	20,611	20,611	20,611	20,611	20,611
Payment Interest Part	0	12,106	11,847	11,580	11,306	11,023	10,731	10,430	10,121
Payment Principal Part	0	8,506	8,764	9,031	9,306	9,589	9,880	10,181	10,491
Cash Flow
Repairs/Construction	2,500	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-281,890	-2,083	-1,713	-1,335	-949	-556	-155	254	671
Depreciation	0	19,753	19,753	19,753	19,753	19,753	19,753	19,753	19,753
Taxes	0	-3,333	-3,175	-3,014	-2,849	-2,680	-2,507	-2,329	-2,148
Cash Flow After Taxes	-281,890	1,249	1,463	1,679	1,900	2,124	2,352	2,584	2,819

Note: All amounts in the table above are in $

Resale Price Evaluation Methods

The property is sold after 8 years. Below is the resale price calculated using different methods.

Appreciation (3.00%)	$ 860,137
Cap Rate (2.73%) & NOI	$ 779,591
Gross Rent Multiplier	$ 779,803

Sale Proceeds

Projected Selling Price	$ 860,137
Costs of Sale (6.00%)	$ 51,608
1. Loan Balance Payoff	$ 331,653
Net Sale Proceeds Before Tax	$ 476,876

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	$ 476,876
Investor Cash Outlay	$ 281,890
Net Assets	$ 194,986
Average Yield
Annual Net Assets	$ 24,373
Average Cash Flow (After Taxes)	$ 1,669
Average Annual Gain (After Taxes)	$ 26,042
Average Annual Yield (After Taxes)	3.84 %

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: 506 Hollywood Ave, Ho Ho Kus RENTAL

Property Report :

506 Hollywood Ave, Ho Ho Kus, NJ 07423

Executive Summary