5107 Wellington Ave, Parma OH 44134

5107 Wellington Ave, Parma, OH 44134

Singlefamily: 3 bedrooms , 1 bathroom

Year built: 1927, Size: 2490 SF

Investment strategy: Rental Property

Purchase Price$ 140,000

Rent$ 1,163/mo

Monthly Cash Flow$ 180

Cash on Cash Return7.71 %

Financial Analysis

Cash on Cash Return	7.71 %
Internal Rate of Return (IRR)	9.92 %
Capitalization Rate	6.13 %
Gross Rent Multiplier (GRM)	10.03
Debt-coverage Ratio (DCR)	1.34
Operating Expense Ratio (OER)	31.73 %

Financial Breakdown

Purchase Price	$ 140,000
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).	$ 140,000
Financing	$ 112,000
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 28,000
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.	$ 28,000
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	$ 1,163/mo
Gross Operating Income (GOI)	$ 12,560
Total Expenses	$ 3,985
Net Operating Income (NOI)	$ 8,575
Annual Debt Service	$ 6,416
Cash Flow Before Taxes (CFBT)	$ 2,159
Income Tax Liability	$ 29
Cash Flow After Taxes (CFAT)	$ 2,130

The home is currently occupied through 8/31/21. Tenant is paying $925 per month. Beautiful updated 3 bedroom 1 bath bungalow. Covered front porch with swing. Newer windows. Spacious living room with lots of windows, track lights. Dining room w/winding stairs, Hardwood floors. Remodeled kitchen with lots of cabinets, features ceramic floors, appliances: gas stove, microwave, refrigerator, dishwasher. Double sink, pantry, ceramic tiles. 1st floor bedroom with closet. Full Updated Bath offers ceramic floors and Corian countertop. 2nd floor: 2 bedrooms with closets, den. Unfinished basement with glass block windows. Fenced in yard. large custom deck.

Purchase Price	$ 140,000
Address	5107 Wellington Ave , Parma, 44134, OH
MLS^® #	4296210
Listing Agent	Kathleen Poelking
Listing Broker	Cleveland Property Management
Year Built	1927
Type	Singlefamily
Size	2490 SF
Bedrooms	3
Bathrooms	1

Property History

Date	Price	Change	Event
10/17/2009
3/28/2008
11/14/1989

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.	$ 13,956
Total Gross Income	$ 13,956
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.	$ 1,396
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.	$ 12,560	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	7.55 %
Property tax	$ 2,617	20.84 %
Insurance	$ 420	3.34 %
Total Expenses	$ 3,985	31.73 %
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.	$ 8,575	68.27 %

Cash Flow (Year 1)

Net Operating Income	$ 8,575	68.27 %
Annual Debt Service	$ 6,416	51.09 %
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.	$ 2,159	17.19 %
Income Tax Liability	$ 29	0.23 %
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.	$ 2,130	16.96 %

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).	31.73 %
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.	82.81 %

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.	$ 39,635
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.	9.92 %
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	2.42
Annual Depreciation	$ 4,073

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.	7.71 %
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.	12.71 %
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.	6.13 %
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.	9.97 %
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.	10.03

Financing
Down Payment		$ 28,000
30y		$ 112,000
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		1.34

30y Financing of: Purchase price ($ 140,000)
Type	Amortized
Loan Amount	$ 112,000
Down payment (20%)	$ 28,000
Amortization	30 years
Interest Rate	4.00 %
Monthly Payment	$ 534.71

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	13,956	14,096	14,237	14,379	14,523	14,668	14,815	14,963	15,112	15,263	15,416	15,570	15,726	15,883	16,042	16,202	16,365	16,528	16,693	16,860	17,029	17,199	17,371	17,545	17,720	17,898	18,077	18,257	18,440	18,624
Vacancy Loss	0	1,396	1,410	1,424	1,438	1,452	1,467	1,481	1,496	1,511	1,526	1,542	1,557	1,573	1,588	1,604	1,620	1,636	1,653	1,669	1,686	1,703	1,720	1,737	1,754	1,772	1,790	1,808	1,826	1,844	1,862
Gross Operating Income	0	12,560	12,686	12,813	12,941	13,070	13,201	13,333	13,466	13,601	13,737	13,875	14,013	14,153	14,295	14,438	14,582	14,728	14,875	15,024	15,174	15,326	15,479	15,634	15,790	15,948	16,108	16,269	16,432	16,596	16,762
Expenses	0	3,985	4,065	4,146	4,229	4,313	4,400	4,488	4,578	4,669	4,762	4,858	4,955	5,054	5,155	5,258	5,363	5,471	5,580	5,692	5,805	5,922	6,040	6,161	6,284	6,410	6,538	6,669	6,802	6,938	7,077
Net Operating Income	0	8,575	8,621	8,667	8,712	8,757	8,801	8,845	8,889	8,932	8,975	9,017	9,058	9,099	9,140	9,180	9,219	9,258	9,295	9,333	9,369	9,405	9,439	9,473	9,507	9,539	9,570	9,600	9,630	9,658	9,685
Loan Payment	0	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416	6,416
Payment Interest Part	0	4,444	4,364	4,280	4,193	4,102	4,008	3,910	3,808	3,702	3,591	3,476	3,356	3,232	3,102	2,967	2,826	2,680	2,528	2,369	2,204	2,033	1,854	1,668	1,475	1,273	1,064	846	619	383	137
Payment Principal Part	0	1,972	2,053	2,136	2,223	2,314	2,408	2,506	2,608	2,715	2,825	2,940	3,060	3,185	3,315	3,450	3,590	3,737	3,889	4,047	4,212	4,384	4,562	4,748	4,942	5,143	5,353	5,571	5,798	6,034	6,280
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	-28,000	2,159	2,205	2,250	2,296	2,340	2,385	2,429	2,472	2,516	2,558	2,600	2,642	2,683	2,723	2,763	2,802	2,841	2,879	2,916	2,952	2,988	3,023	3,057	3,090	3,122	3,154	3,184	3,213	3,241	3,269
Depreciation	0	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073	4,073
Taxes	0	29	92	157	223	291	360	431	504	579	655	734	815	897	983	1,070	1,160	1,252	1,347	1,445	1,546	1,649	1,756	1,866	1,979	2,096	2,217	2,341	2,469	2,601	2,738
Cash Flow After Taxes	-28,000	2,130	2,113	2,094	2,073	2,050	2,025	1,998	1,969	1,937	1,903	1,866	1,827	1,786	1,741	1,693	1,643	1,589	1,532	1,471	1,407	1,339	1,267	1,191	1,111	1,026	937	843	744	640	531

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%)	$ 188,699
Cap Rate (6.13%) & NOI	$ 157,996
Gross Rent Multiplier	$ 186,802

Sale Proceeds

Projected Selling Price	$ 188,699
Costs of Sale (6.00%)	$ 11,322
Net Sale Proceeds Before Tax	$ 177,377

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	$ 177,377
Investor Cash Outlay	$ 28,000
Net Assets	$ 149,377
Average Yield
Annual Net Assets	$ 4,979
Average Cash Flow (After Taxes)	$ 1,531
Average Annual Gain (After Taxes)	$ 6,511
Average Annual Yield (After Taxes)	4.65 %

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: 5107 Wellington Ave, Parma RENTAL

Property Report :

5107 Wellington Ave, Parma, OH 44134

Executive Summary