66 house package: 7163 Marsden St, Philadelphia PA 19135

7163 Marsden St, Philadelphia, PA 19135

Singlefamily: 6 rooms: 3 bedrooms , 1 bathroom

Year built: 1947, Size: 1320 SF

Investment strategy: Rental Property

67 house package

Purchase Price$ 6,600,000

Rent$ 70,326/mo

Monthly Cash Flow$ 23,376

Cash on Cash Return15.18 %

Financial Analysis

Cash on Cash Return	15.18 %
Internal Rate of Return (IRR)	18.00 %
Capitalization Rate	8.94 %
Gross Rent Multiplier (GRM)	7.82
Debt-coverage Ratio (DCR)	1.91
Operating Expense Ratio (OER)	30.04 %

Financial Breakdown

Purchase Price	$ 6,600,000
Purchase Costs	$ 198,000
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).	$ 6,798,000
Financing	$ 4,950,000
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 1,848,000
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.	$ 1,650,000
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.	$ 198,000

Operating Analysis

Rent	$ 70,326/mo
Gross Operating Income (GOI)	$ 843,912
Total Expenses	$ 253,544
Net Operating Income (NOI)	$ 590,368
Annual Debt Service	$ 309,859
Cash Flow Before Taxes (CFBT)	$ 280,510
Income Tax Liability	$ 35,223
Cash Flow After Taxes (CFAT)	$ 245,287

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.	$ 843,912
	$ 0
Total Gross Income	$ 843,912
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.	$ 843,912	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	$ 50,635	6.00 %
Insurance	$ 30,553	3.62 %
Repairs	$ 42,196	5.00 %
Property tax	$ 87,965	10.42 %
Cap Ex	$ 42,196	5.00 %
Total Expenses	$ 253,544	30.04 %
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.	$ 590,368	69.96 %

Cash Flow (Year 1)

Net Operating Income	$ 590,368	69.96 %
Annual Debt Service	$ 309,859	36.72 %
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.	$ 280,510	33.24 %
Income Tax Liability	$ 35,223	4.17 %
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.	$ 245,287	29.07 %

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).	30.04 %
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.	66.76 %

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.	$ 3,654,027
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.	18.00 %
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	2.98
Annual Depreciation	$ 216,000

Holding period of 15 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.	15.18 %
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.	22.32 %
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.	8.94 %
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.	12.79 %
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.	7.82

Financing
Down Payment		$ 1,650,000
Gary		$ 4,950,000
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.		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		1.91

Gary Financing of: Purchase price ($ 6,600,000)
Type	Amortized
Loan Amount	$ 4,950,000
Down payment (25%)	$ 1,650,000
Amortization	30 years
Interest Rate	4.75 %
Monthly Payment	$ 25,821.54

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
Operational Analysis
Gross Scheduled Income	0	843,912	860,790	878,006	895,566	913,477	931,747	950,382	969,390	988,777	1,008,553	1,028,724	1,049,298	1,070,284	1,091,690	1,113,524
Vacancy Loss	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Gross Operating Income	0	843,912	860,790	878,006	895,566	913,477	931,747	950,382	969,390	988,777	1,008,553	1,028,724	1,049,298	1,070,284	1,091,690	1,113,524
Expenses	0	253,544	258,615	263,787	269,063	274,444	279,933	285,532	291,242	297,067	303,008	309,069	315,250	321,555	327,986	334,546
Net Operating Income	0	590,368	602,175	614,219	626,503	639,033	651,814	664,850	678,147	691,710	705,544	719,655	734,048	748,729	763,704	778,978
Loan Payment	0	309,859	309,859	309,859	309,859	309,859	309,859	309,859	309,859	309,859	309,859	309,859	309,859	309,859	309,859	309,859
Payment Interest Part	0	233,476	229,768	225,880	221,803	217,528	213,046	208,346	203,417	198,250	192,831	187,150	181,193	174,946	168,397	161,529
Payment Principal Part	0	76,382	80,090	83,979	88,056	92,330	96,813	101,513	106,441	111,609	117,027	122,709	128,666	134,912	141,462	148,330
Cash Flow
Repairs/Construction	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-1,848,000	280,510	292,317	304,360	316,645	329,175	341,956	354,992	368,289	381,852	395,686	409,797	424,190	438,871	453,846	469,120
Depreciation	0	216,000	216,000	216,000	216,000	216,000	216,000	216,000	216,000	216,000	216,000	216,000	216,000	216,000	216,000	216,000
Taxes	0	35,223	39,102	43,085	47,175	51,376	55,692	60,126	64,683	69,365	74,178	79,126	84,214	89,446	94,827	100,362
Cash Flow After Taxes	-1,848,000	245,287	253,215	261,276	269,470	277,799	286,263	294,866	303,606	312,487	321,508	330,671	339,976	349,425	359,019	368,757

Note: All amounts in the table above are in $

Resale Price Evaluation Methods

The property is sold after 15 years. Below is the resale price calculated using different methods.

Appreciation (2.00%)	$ 8,882,731
Cap Rate (8.94%) & NOI	$ 8,713,402
Gross Rent Multiplier	$ 8,707,757

Sale Proceeds

Projected Selling Price	$ 8,882,731
Costs of Sale (6.00%)	$ 532,964
1. Loan Balance Payoff	$ 3,319,682
Net Sale Proceeds Before Tax	$ 5,030,086

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	$ 5,030,086
Investor Cash Outlay	$ 1,848,000
Net Assets	$ 3,182,086
Average Yield
Annual Net Assets	$ 212,139
Average Cash Flow (After Taxes)	$ 280,324
Average Annual Gain (After Taxes)	$ 492,463
Average Annual Yield (After Taxes)	7.46 %

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: 66 house package RENTAL

Property Report :

66 house package

7163 Marsden St, Philadelphia, PA 19135

Executive Summary

7163 Marsden St, Philadelphia, PA 19135

Financial Analysis

Financial Breakdown

Total Capital Needed

Total Capital Needed

Cash out of Pocket

Cash out of Pocket

Cash at Closing

Cash at Closing

Cash During Rehab

Cash During Rehab

Operating Analysis

Operating Analysis

Annual Property Operating Data

Gross Scheduled Income (GSI)

Gross Scheduled Income (GSI)

Vacancy and Credit Loss

Vacancy and Credit Loss

Gross Operating Income (GOI)

Gross Operating Income (GOI)

Operating Expenses

Operating Expenses

Net Operating Income (NOI)

Net Operating Income (NOI)

Cash Flow (Year 1)

Cash Flow

Cash Flow

Cash Flow

Cash Flow

Operating Ratios

Operating Expense Ratio

Operating Expense Ratio

Break-Even Ratio (BER)

Break-Even Ratio (BER)

Financial Analysis

Financial Measures

Net Present Value (NPV)

Net Present Value (NPV)

Internal Rate of Return (IRR)

Internal Rate of Return (IRR)

Profitability Index

Profitability Index

Investment Return Ratios

Cash on Cash Return

Cash on Cash Return

Return on Investment

Return on Investment

Capitalization Rate

Capitalization Rate

Gross Rental Yield

Gross Rental Yield

Gross Rent Multiplier (GRM)

Gross Rent Multiplier (GRM)

Financing Overview

Loan to Value Ratio

Loan to Value Ratio

Loan to Cost Ratio

Loan to Cost Ratio

Long-term Cash Flow Forecast

Resale Analysis

Resale Price Evaluation Methods

Sale Proceeds

Net Assets and Yield

Photos