814 Gerard St, Durham NC 27701

814 Gerard St, Durham, NC 27701

Singlefamily: 2 bedrooms , 2 bathrooms

Year built: 1920, Size: 1276 SF

Investment strategy: Rental Property

Purchase Price$ 293,000

Rent$ 1,615/mo

Monthly Cash Flow$ 1,166

Cash on Cash Return23.88 %

Financial Analysis

Cash on Cash Return	23.88 %
Internal Rate of Return (IRR)	19.78 %
Capitalization Rate	4.78 %
Gross Rent Multiplier (GRM)	15.12
Debt-coverage Ratio (DCR)	0.00
Operating Expense Ratio (OER)	19.77 %

Financial Breakdown

Purchase Price	$ 293,000
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).	$ 293,000
Financing	$ 234,400
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 58,600
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.	$ 58,600
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.	$ 0

Operating Analysis

Rent	$ 1,615/mo
Gross Operating Income (GOI)	$ 17,442
Total Expenses	$ 3,448
Net Operating Income (NOI)	$ 13,994
Annual Debt Service	$ 0
Cash Flow Before Taxes (CFBT)	$ 13,994
Income Tax Liability	$ 2,735
Cash Flow After Taxes (CFAT)	$ 11,259

814 Gerard St, Durham, NC 27701 is a single family home built in 1920. According to the Durham public records, the property at 814 Gerard St, Durham, NC 27701 has approximately 1276 square feet, 2 beds and 2 baths with a lot size of 5,663 square feet. Nearby schools include Lakewood Elementary, Sherwood Githens Middle and Charles E Jordan Sr High School.

Purchase Price	$ 293,000
Address	814 Gerard St , Durham, 27701, NC
Year Built	1920
Type	Singlefamily
Size	1276 SF
Bedrooms	2
Bathrooms	2

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.	$ 19,380
Total Gross Income	$ 19,380
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.	$ 1,938
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.	$ 17,442	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	5.44 %
Property tax	$ 2,500	14.33 %
Total Expenses	$ 3,448	19.77 %
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.	$ 13,994	80.23 %

Cash Flow (Year 1)

Net Operating Income	$ 13,994	80.23 %
Annual Debt Service	$ 0	0.00 %
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.	$ 13,994	80.23 %
Income Tax Liability	$ 2,735	15.68 %
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.	$ 11,259	64.55 %

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).	19.77 %
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.	19.77 %

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.	$ 155,225
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.	19.78 %
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	3.65
Annual Depreciation	$ 8,524

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.	23.88 %
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.	28.88 %
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.	4.78 %
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.	6.61 %
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.	15.12

Financing
Down Payment		$ 58,600
30y		$ 234,400
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.		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		0.00

30y Financing of: Purchase price ($ 293,000)
Type	Amortized
Loan Amount	$ 234,400
Down payment (20%)	$ 58,600
Amortization	30 years
Interest Rate	0.00 %
Monthly Payment	$ 0.00

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	21	22	23	24	25	26	27	28	29	30
Operational Analysis
Gross Scheduled Income	0	19,380	19,574	19,770	19,967	20,167	20,369	20,572	20,778	20,986	21,196	21,408	21,622	21,838	22,056	22,277	22,500	22,725	22,952	23,181	23,413	23,647	23,884	24,123	24,364	24,607	24,854	25,102	25,353	25,607	25,863
Vacancy Loss	0	1,938	1,957	1,977	1,997	2,017	2,037	2,057	2,078	2,099	2,120	2,141	2,162	2,184	2,206	2,228	2,250	2,272	2,295	2,318	2,341	2,365	2,388	2,412	2,436	2,461	2,485	2,510	2,535	2,561	2,586
Gross Operating Income	0	17,442	17,616	17,793	17,971	18,150	18,332	18,515	18,700	18,887	19,076	19,267	19,459	19,654	19,851	20,049	20,250	20,452	20,657	20,863	21,072	21,283	21,495	21,710	21,927	22,147	22,368	22,592	22,818	23,046	23,276
Expenses	0	3,448	3,517	3,587	3,659	3,732	3,807	3,883	3,961	4,040	4,121	4,203	4,287	4,373	4,460	4,550	4,641	4,733	4,828	4,925	5,023	5,124	5,226	5,331	5,437	5,546	5,657	5,770	5,885	6,003	6,123
Net Operating Income	0	13,994	14,099	14,205	14,311	14,418	14,525	14,632	14,740	14,847	14,955	15,064	15,172	15,281	15,390	15,500	15,609	15,719	15,829	15,939	16,049	16,159	16,269	16,380	16,490	16,601	16,711	16,822	16,932	17,043	17,153
Loan Payment	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
Payment Interest Part	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
Payment Principal Part	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	234,400
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	-58,600	13,994	14,099	14,205	14,311	14,418	14,525	14,632	14,740	14,847	14,955	15,064	15,172	15,281	15,390	15,500	15,609	15,719	15,829	15,939	16,049	16,159	16,269	16,380	16,490	16,601	16,711	16,822	16,932	17,043	17,153
Depreciation	0	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524	8,524
Taxes	0	2,735	2,788	2,841	2,894	2,947	3,000	3,054	3,108	3,162	3,216	3,270	3,324	3,379	3,433	3,488	3,543	3,597	3,652	3,707	3,762	3,818	3,873	3,928	3,983	4,038	4,094	4,149	4,204	4,259	4,315
Cash Flow After Taxes	-58,600	11,259	11,312	11,365	11,418	11,471	11,524	11,578	11,632	11,686	11,740	11,794	11,848	11,903	11,957	12,012	12,067	12,121	12,176	12,231	12,286	12,342	12,397	12,452	12,507	12,562	12,618	12,673	12,728	12,783	12,839

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%)	$ 394,920
Cap Rate (4.78%) & NOI	$ 358,856
Gross Rent Multiplier	$ 391,044

Sale Proceeds

Projected Selling Price	$ 394,920
Costs of Sale (6.00%)	$ 23,695
1. Loan Balance Payoff	$ 234,400
Net Sale Proceeds Before Tax	$ 136,825

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	$ 136,825
Investor Cash Outlay	$ 58,600
Net Assets	$ 78,225
Average Yield
Annual Net Assets	$ 2,608
Average Cash Flow (After Taxes)	$ 11,615
Average Annual Gain (After Taxes)	$ 14,222
Average Annual Yield (After Taxes)	4.85 %

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: 814 Gerard St, Durham RENTAL

Property Report :

814 Gerard St, Durham, NC 27701

Executive Summary