509 Normandy Ave, Baltimore MD 21229

509 Normandy Ave, Baltimore, MD 21229

Singlefamily: 3 bedrooms , 2 bathrooms

Year built: 1921, Size: 1458 SF

Investment strategy: Rental Property

Purchase Price$ 50,000

Rent$ 1,250/mo

Monthly Cash Flow$ 539

Cash on Cash ReturnInfinite

Financial Analysis

Cash on Cash Return	Infinite
Internal Rate of Return (IRR)	N/A
Capitalization Rate	10.22 %
Gross Rent Multiplier (GRM)	8.27
Debt-coverage Ratio (DCR)	2.04
Operating Expense Ratio (OER)	9.15 %
After Repair Value	$ 124,000
Profit/Equity From Rehab	$ 66,520

Financial Breakdown

Purchase Price	$ 50,000
Purchase Costs	$ 5,980
Repair/Construction Costs	$ 1,500
Total Capital Needed Total Capital Needed Includes all projects costs (except selling costs). Total Capital Needed Includes all projects costs (except selling costs).	$ 57,480
Financing	$ 124,000
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ -66,520
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.	$ 2,480
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.	$ -69,000

Operating Analysis

Rent	$ 1,250/mo
Gross Operating Income (GOI)	$ 13,950
Total Expenses	$ 1,277
Net Operating Income (NOI)	$ 12,674
Annual Debt Service	$ 6,200
Cash Flow Before Taxes (CFBT)	$ 6,474
Income Tax Liability	$ 1,255
Cash Flow After Taxes (CFAT)	$ 5,219

Purchase Price	$ 50,000
Address	509 Normandy Ave , Baltimore, 21229, MD
Year Built	1921
Type	Singlefamily
Size	1458 SF
Bedrooms	3
Bathrooms	2

Date	Seller	Buyer	Price
9/27/2016	Kurtz Investments LLC	3430 Mondawin Ave LLC	$ 10,000
6/25/2015	I & B Capital Investments LLC	Kurtz Investments LLC	$ 33,000
6/22/2015	Christiana Trust 2014-1	I & B Capital Investments LLC	$ 33,000
11/20/2014	Osullivan Laura H G\|burgess Karen V	Christiana Trust 2014-1 Tr	$ 112,000
9/27/2007	Barron, Richard	Burgess, Karen V	$ 137,500
10/11/2006	Deutsche Bk Natl Trust 2005-Opt2	Barron, Richard	$ 60,000
6/5/2006	Biermn Howard N	Deutsche Bk Natl Trust 2005-Opt2	$ 55,250

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.	$ 15,000
Total Gross Income	$ 15,000
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.	$ 1,050
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.	$ 13,950	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).
Repairs	$ 977	7.00 %
Property tax	$ 300	2.15 %
Total Expenses	$ 1,277	9.15 %
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.	$ 12,674	90.85 %

Cash Flow (Year 1)

Net Operating Income	$ 12,674	90.85 %
Annual Debt Service	$ 6,200	44.44 %
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.	$ 6,474	46.41 %
Income Tax Liability	$ 1,255	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.	$ 5,219	37.41 %

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).	9.15 %
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.	53.59 %

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.	$ 127,937
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.	N/A
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	-0.92
Annual Depreciation	$ 1,455

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.	Infinite
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.	Infinite
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.	10.22 %
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.	30.00 %
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.	8.27

Financing		% of ARV
Down Payment	$ 0	0.00 %
Loan	$ 124,000	100.00 %
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.		248.00 %
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).		240.78 %
Debt Coverage Ratio		2.04

Loan Financing of: After Repair Value ($ 124,000)
Type	Interest-Only
Loan Amount	$ 124,000
Down payment (0%)	$ 0
Loan term	5 years
Interest Rate	5.00 %
Monthly Payment	$ 516.67

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	15,000	15,300	15,606	15,918	16,236	16,561	16,892	17,230	17,575	17,926
Vacancy Loss	0	1,050	1,071	1,092	1,114	1,137	1,159	1,182	1,206	1,230	1,255
Gross Operating Income	0	13,950	14,229	14,514	14,804	15,100	15,402	15,710	16,024	16,345	16,672
Expenses	0	1,277	1,302	1,328	1,355	1,382	1,409	1,438	1,466	1,496	1,526
Net Operating Income	0	12,674	12,927	13,186	13,449	13,718	13,993	14,272	14,558	14,849	15,146
Loan Payment	0	6,200	6,200	6,200	6,200	6,200	0	0	0	0	0
Payment Interest Part	0	6,200	6,200	6,200	6,200	6,200	0	0	0	0	0
Payment Principal Part	0	0	0	0	0	0	0	0	0	0	0
Cash Flow
Repairs/Construction	1,500	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	66,520	6,474	6,727	6,986	7,249	-116,482	13,993	14,272	14,558	14,849	15,146
Depreciation	0	1,455	1,455	1,455	1,455	1,455	1,455	1,455	1,455	1,455	1,455
Taxes	0	1,255	1,318	1,383	1,449	1,516	3,134	3,204	3,276	3,349	3,423
Cash Flow After Taxes	66,520	5,219	5,409	5,603	5,801	-117,998	10,858	11,068	11,282	11,501	11,723

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 (3.00%)	$ 166,646
Cap Rate (10.22%) & NOI	$ 148,200
Gross Rent Multiplier	$ 148,251

Sale Proceeds

Projected Selling Price	$ 166,646
Costs of Sale (6.00%)	$ 9,999
Net Sale Proceeds Before Tax	$ 156,647

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	$ 156,647
Investor Cash Outlay	$ -66,520
Net Assets	$ 223,167
Average Yield
Annual Net Assets	$ 22,317
Average Cash Flow (After Taxes)	$ -5,126
Average Annual Gain (After Taxes)	$ 17,191
Average Annual Yield (After Taxes)	34.38 %

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: 509 Normandy Ave, Baltimore RENTAL

Property Report :

509 Normandy Ave, Baltimore, MD 21229

Executive Summary