8227 S Maryland Ave Property: 8227 S Maryland Ave, Chicago IL 60619

8227 S Maryland Ave, Chicago, IL 60619

Investment strategy: Rental Property

Purchase Price$ 480,000

Rent$ 7,200/mo

Monthly Cash Flow$ 3,849

Cash on Cash Return9.62 %

Financial Analysis

Cash on Cash Return	9.62 %
Internal Rate of Return (IRR)	10.15 %
Capitalization Rate	9.62 %
Gross Rent Multiplier (GRM)	5.56
Debt-coverage Ratio (DCR)	0.00
Operating Expense Ratio (OER)	40.60 %

Financial Breakdown

Purchase Price	$ 480,000
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).	$ 480,000
Financing	$ 0
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 480,000
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.	$ 0
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.	$ 480,000

Operating Analysis

Rent	$ 7,200/mo
Gross Operating Income (GOI)	$ 77,760
Total Expenses	$ 31,572
Net Operating Income (NOI)	$ 46,188
Annual Debt Service	$ 0
Cash Flow Before Taxes (CFBT)	$ 46,188
Income Tax Liability	$ 8,056
Cash Flow After Taxes (CFAT)	$ 38,132

Purchase Price	$ 480,000
Address	8227 S Maryland Ave , Chicago, 60619, IL

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.	$ 86,400
Total Gross Income	$ 86,400
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.	$ 8,640
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.	$ 77,760	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	$ 3,888	5.00 %
Gas	$ 7,500	9.65 %
Insurance	$ 4,600	5.92 %
Property tax	$ 4,625	5.95 %
Electric	$ 450	0.58 %
Water/Sewer	$ 2,400	3.09 %
Trash	$ 2,223	2.86 %
Janitor	$ 1,800	2.31 %
Maintenance / Repair	$ 1,800	2.31 %
Miscellaneious	$ 786	1.01 %
Reserves	$ 1,500	1.93 %
Total Expenses	$ 31,572	40.60 %
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.	$ 46,188	59.40 %

Cash Flow (Year 1)

Net Operating Income	$ 46,188	59.40 %
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.	$ 46,188	59.40 %
Income Tax Liability	$ 8,056	10.36 %
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.	$ 38,132	49.04 %

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).	40.60 %
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.	40.60 %

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.	$ 209,791
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.	10.15 %
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	1.44
Annual Depreciation	$ 13,964

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.	9.62 %
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.	12.62 %
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.	9.62 %
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.	18.00 %
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.	5.56

There is no financing selected in this deal.

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	86,400	88,128	89,891	91,688	93,522	95,393	97,300	99,246	101,231	103,256
Vacancy Loss	0	8,640	8,813	8,989	9,169	9,352	9,539	9,730	9,925	10,123	10,326
Gross Operating Income	0	77,760	79,315	80,902	82,520	84,170	85,853	87,570	89,322	91,108	92,930
Expenses	0	31,572	32,203	32,848	33,504	34,175	34,858	35,555	36,266	36,992	37,731
Net Operating Income	0	46,188	47,112	48,054	49,015	49,995	50,995	52,015	53,055	54,117	55,199
Cash Flow
Repairs/Construction	0	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-480,000	46,188	47,112	48,054	49,015	49,995	50,995	52,015	53,055	54,117	55,199
Depreciation	0	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964
Taxes	0	8,056	8,287	8,523	8,763	9,008	9,258	9,513	9,773	10,038	10,309
Cash Flow After Taxes	-480,000	38,132	38,825	39,531	40,252	40,988	41,737	42,502	43,283	44,078	44,890

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%)	$ 645,080
Cap Rate (9.62%) & NOI	$ 573,794
Gross Rent Multiplier	$ 574,103

Sale Proceeds

Projected Selling Price	$ 645,080
Costs of Sale (6.00%)	$ 38,705
Net Sale Proceeds Before Tax	$ 606,375

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	$ 606,375
Investor Cash Outlay	$ 480,000
Net Assets	$ 126,375
Average Yield
Annual Net Assets	$ 12,638
Average Cash Flow (After Taxes)	$ 36,933
Average Annual Gain (After Taxes)	$ 49,570
Average Annual Yield (After Taxes)	10.33 %

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: 8227 S Maryland Ave Property RENTAL

Property Report :

8227 S Maryland Ave Property

8227 S Maryland Ave, Chicago, IL 60619

Executive Summary

8227 S Maryland Ave, Chicago, IL 60619

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

Property Description

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

Long-term Cash Flow Forecast

Resale Analysis

Resale Price Evaluation Methods

Sale Proceeds

Net Assets and Yield

Photos