6401 Dr M.L.K. Jr St N, St. Petersburg FL 33702

6401 Dr M.L.K. Jr St N, St. Petersburg, FL 33702

Commercial (Retail):

Year built: 1968, Size: 6300 SF

Investment strategy: Wholesale deal offered to a rental investor

Retail Strip center with 4 units.

Contract Price$ 1,000,000

Wholesale Fee$ 0

Monthly Cash Flow$ -2,269

Cash on Cash Return-9.90 %

A-B Investment

Contract Price	$ 1,000,000
Wholesale Assignment Fee	$ 0
Wholesale Price	$ 1,000,000

B-C Investment

Purchase Price	$ 1,000,000
Purchase Costs	$ 25,000
Repair/Construction Costs	$ 100,000
Total Capital Needed Total Capital Needed Includes all projects costs (except selling costs). Total Capital Needed Includes all projects costs (except selling costs).	$ 1,125,000
Net Present Value (NPV)	$ 16,523
Internal Rate of Return (IRR)	5.22 %
Cash on Cash Return	-9.90 %
Capitalization Rate	3.24 %
After Repair Value	$ 1,000,000

Operating Analysis

Rent	$ 3,000/mo
Gross Operating Income (GOI)	$ 32,400
Total Expenses	$ 0
Net Operating Income (NOI)	$ 32,400
Annual Debt Service	$ 59,628
Cash Flow Before Taxes (CFBT)	$ -27,228
Income Tax Liability	$ -7,554
Cash Flow After Taxes (CFAT)	$ -19,674

Purchase Price	$ 1,000,000
Address	6401 Dr M.L.K. Jr St N , St. Petersburg, 33702, FL
Year Built	1968
Type	Commercial
Category	Retail
Size	6300 SF

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.	$ 36,000
Total Gross Income	$ 36,000
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.	$ 3,600
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.	$ 32,400	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).
Total Expenses	$ 0	0.00 %
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.	$ 32,400	100.00 %

Cash Flow (Year 1)

Net Operating Income	$ 32,400	100.00 %
Annual Debt Service	$ 59,628	184.04 %
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.	$ -27,228	-84.04 %
Income Tax Liability	$ -7,554	-23.31 %
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.	$ -19,674	-60.72 %

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).	0.00 %
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.	184.04 %

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.	$ 16,523
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.	5.22 %
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	1.06
Annual Depreciation	$ 20,513

Holding period of 20 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.	-9.90 %
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.	1.01 %
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.	3.24 %
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.	3.60 %
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.	27.78

Financing		% of ARV
Down Payment	$ 150,000	15.00 %
1. Loan	$ 850,000	85.00 %
2. Loan (Refinance)	$ 706,796	70.68 %
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.		85.00 %
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).		77.27 %
Debt Coverage Ratio		0.54

1. Loan Financing of: Purchase price ($ 1,000,000)
Type	Amortized
Loan Amount	$ 850,000
Down payment (15%)	$ 150,000
Amortization	25 years
Balloon Payment	Year 7
Interest Rate	5.00 %
Monthly Payment	$ 4,969.02

2. Loan (Refinance) Financing of: Refinance ($ 1,000,000)
Type	Amortized
Loan Amount	$ 706,796
Amortization	30 years
Interest Rate	5.00 %
Monthly Payment	$ 3,794.23
Profit Split	30.00 %

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
Operational Analysis
Gross Scheduled Income	0	36,000	36,720	37,454	38,203	38,968	39,747	40,542	41,353	42,180	43,023	43,884	44,761	45,657	46,570	47,501	48,451	49,420	50,409	51,417	52,445
Vacancy Loss	0	3,600	3,672	3,745	3,820	3,897	3,975	4,054	4,135	4,218	4,302	4,388	4,476	4,566	4,657	4,750	4,845	4,942	5,041	5,142	5,245
Gross Operating Income	0	32,400	33,048	33,709	34,383	35,071	35,772	36,488	37,217	37,962	38,721	39,495	40,285	41,091	41,913	42,751	43,606	44,478	45,368	46,275	47,201
Expenses	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Net Operating Income	0	32,400	33,048	33,709	34,383	35,071	35,772	36,488	37,217	37,962	38,721	39,495	40,285	41,091	41,913	42,751	43,606	44,478	45,368	46,275	47,201
1. Loan Payment	0	59,628	59,628	59,628	59,628	59,628	59,628	59,628	0	0	0	0	0	0	0	0	0	0	0	0	0
Payment Interest Part	0	42,102	41,205	40,263	39,272	38,231	37,136	35,985	0	0	0	0	0	0	0	0	0	0	0	0	0
Payment Principal Part	0	17,526	18,423	19,365	20,356	21,398	22,492	730,439	0	0	0	0	0	0	0	0	0	0	0	0	0
2. Loan Payment	0	0	0	0	0	0	0	0	45,531	45,531	45,531	45,531	45,531	45,531	45,531	45,531	45,531	45,531	45,531	45,531	45,531
Payment Interest Part	0	0	0	0	0	0	0	0	35,103	34,569	34,009	33,419	32,800	32,148	31,463	30,744	29,987	29,192	28,356	27,477	26,554
Payment Principal Part	0	0	0	0	0	0	0	0	10,428	10,961	11,522	12,112	12,731	13,383	14,067	14,787	15,544	16,339	17,175	18,053	18,977
Total Debt Service	0	59,628	59,628	59,628	59,628	59,628	59,628	59,628	45,531	45,531	45,531	45,531	45,531	45,531	45,531	45,531	45,531	45,531	45,531	45,531	45,531
Cash Flow
Repairs/Construction	100,000	0	15,000	0	0	0	0	0	0	0	50,000	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-275,000	-27,228	-41,580	-25,919	-25,245	-24,557	-23,856	-23,141	-8,313	-7,569	-56,810	-6,035	-5,245	-4,440	-3,618	-2,780	-1,925	-1,053	-163	744	1,670
Depreciation	0	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513	20,513
Taxes	0	-7,554	-10,918	-6,767	-6,350	-5,918	-5,469	-5,003	-4,600	-4,280	-16,450	-3,609	-3,257	-2,893	-2,516	-2,126	-1,724	-1,307	-875	-429	33
Cash Flow After Taxes	-275,000	-19,674	-30,663	-19,153	-18,895	-18,639	-18,387	-18,138	-3,714	-3,289	-40,360	-2,426	-1,989	-1,547	-1,102	-653	-201	254	712	1,173	1,636

Note: All amounts in the table above are in $

Resale Price Evaluation Methods

The property is sold after 20 years. Below is the resale price calculated using different methods.

Appreciation (3.00%)	$ 1,806,111
Cap Rate (3.24%) & NOI	$ 1,456,811
Gross Rent Multiplier	$ 1,456,928

Sale Proceeds

Projected Selling Price	$ 1,806,111
Costs of Sale (6.00%)	$ 108,367
2. Loan Balance Payoff	$ 520,717
Net Sale Proceeds Before Tax	$ 1,177,027

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	$ 1,177,027
Investor Cash Outlay	$ 275,000
Net Assets	$ 902,027
Average Yield
Annual Net Assets	$ 45,101
Average Cash Flow (After Taxes)	$ -9,834
Average Annual Gain (After Taxes)	$ 35,267
Average Annual Yield (After Taxes)	3.53 %

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: 6401 Dr M.L.K. Jr St N, St. Petersburg WHOLESALE

Property Report :

6401 Dr M.L.K. Jr St N, St. Petersburg, FL 33702

Executive Summary