830 W Shore Dr, Delafield WI 53018

830 W Shore Dr, Delafield, WI 53018

Townhouse:

Investment strategy: Rental Property

Purchase Price$ 480,000

Rent$ 4,000/mo

Monthly Cash Flow$ 1,220

Cash on Cash Return11.82 %

Financial Analysis

Cash on Cash Return	11.82 %
Internal Rate of Return (IRR)	14.75 %
Capitalization Rate	7.09 %
Gross Rent Multiplier (GRM)	10.00
Debt-coverage Ratio (DCR)	1.75
Operating Expense Ratio (OER)	26.90 %

Financial Breakdown

Purchase Price	$ 480,000
Purchase Costs	$ 3,800
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).	$ 483,800
Financing	$ 360,000
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 123,800
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.	$ 121,800
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.	$ 2,000

Operating Analysis

Rent	$ 4,000/mo
Gross Operating Income (GOI)	$ 46,560
Total Expenses	$ 12,525
Net Operating Income (NOI)	$ 34,035
Annual Debt Service	$ 19,399
Cash Flow Before Taxes (CFBT)	$ 14,636
Income Tax Liability	$ 1,895
Cash Flow After Taxes (CFAT)	$ 12,741

Purchase Price	$ 480,000
Address	830 W Shore Dr , Delafield, 53018, WI
Type	Townhouse

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.	$ 48,000
Total Gross Income	$ 48,000
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.	$ 1,440
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.	$ 46,560	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).
Insurance	$ 2,500	5.37 %
Repairs	$ 3,725	8.00 %
Property tax	$ 6,300	13.53 %
Total Expenses	$ 12,525	26.90 %
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.	$ 34,035	73.10 %

Cash Flow (Year 1)

Net Operating Income	$ 34,035	73.10 %
Annual Debt Service	$ 19,399	41.66 %
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.	$ 14,636	31.44 %
Income Tax Liability	$ 1,895	4.07 %
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.	$ 12,741	27.36 %

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).	26.90 %
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.	68.56 %

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.	$ 416,449
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.	14.75 %
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	4.36
Annual Depreciation	$ 13,964

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.	11.82 %
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.	23.45 %
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.	7.09 %
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.	10.00 %
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.	10.00

Financing
Down Payment		$ 120,000
conventional		$ 360,000
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		1.75

conventional Financing of: Purchase price ($ 480,000)
Type	Amortized
Loan Amount	$ 360,000
Down payment (25%)	$ 120,000
Amortization	30 years
Interest Rate	3.50 %
Monthly Payment	$ 1,616.56

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	48,000	48,960	49,939	50,938	51,957	52,996	54,056	55,137	56,240	57,364	58,512	59,682	60,876	62,093	63,335	64,602	65,894	67,212	68,556	69,927	71,325	72,752	74,207	75,691	77,205	78,749	80,324	81,931	83,569	85,241
Vacancy Loss	0	1,440	1,469	1,498	1,528	1,559	1,590	1,622	1,654	1,687	1,721	1,755	1,790	1,826	1,863	1,900	1,938	1,977	2,016	2,057	2,098	2,140	2,183	2,226	2,271	2,316	2,362	2,410	2,458	2,507	2,557
Gross Operating Income	0	46,560	47,491	48,441	49,410	50,398	51,406	52,434	53,483	54,552	55,644	56,756	57,892	59,049	60,230	61,435	62,664	63,917	65,195	66,499	67,829	69,186	70,569	71,981	73,420	74,889	76,387	77,914	79,473	81,062	82,683
Expenses	0	12,525	12,775	13,031	13,291	13,557	13,828	14,105	14,387	14,675	14,968	15,268	15,573	15,885	16,202	16,526	16,857	17,194	17,538	17,889	18,246	18,611	18,983	19,363	19,750	20,145	20,548	20,959	21,378	21,806	22,242
Net Operating Income	0	34,035	34,716	35,410	36,118	36,841	37,578	38,329	39,096	39,878	40,675	41,489	42,318	43,165	44,028	44,909	45,807	46,723	47,657	48,611	49,583	50,574	51,586	52,618	53,670	54,743	55,838	56,955	58,094	59,256	60,441
Loan Payment	0	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399	19,399
Payment Interest Part	0	12,490	12,244	11,990	11,726	11,453	11,171	10,878	10,575	10,261	9,936	9,600	9,251	8,890	8,516	8,129	7,729	7,313	6,884	6,438	5,978	5,500	5,006	4,494	3,964	3,415	2,846	2,258	1,648	1,017	363
Payment Principal Part	0	6,909	7,155	7,409	7,673	7,945	8,228	8,521	8,824	9,138	9,463	9,799	10,148	10,509	10,882	11,269	11,670	12,085	12,515	12,960	13,421	13,899	14,393	14,905	15,435	15,984	16,552	17,141	17,751	18,382	19,036
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	-123,800	14,636	15,317	16,011	16,720	17,442	18,179	18,930	19,697	20,479	21,276	22,090	22,920	23,766	24,629	25,510	26,408	27,324	28,259	29,212	30,184	31,176	32,187	33,219	34,271	35,345	36,440	37,556	38,695	39,857	41,042
Depreciation	0	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964	13,964
Taxes	0	1,895	2,127	2,364	2,607	2,856	3,111	3,372	3,639	3,913	4,194	4,481	4,776	5,078	5,387	5,704	6,029	6,361	6,702	7,052	7,410	7,778	8,154	8,540	8,936	9,341	9,757	10,183	10,621	11,069	11,529
Cash Flow After Taxes	-123,800	12,741	13,190	13,647	14,113	14,586	15,068	15,559	16,058	16,566	17,083	17,609	18,144	18,688	19,242	19,806	20,380	20,963	21,556	22,160	22,774	23,398	24,033	24,679	25,336	26,004	26,683	27,373	28,075	28,788	29,514

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 (3.00%)	$ 1,165,086
Cap Rate (7.09%) & NOI	$ 852,485
Gross Rent Multiplier	$ 852,405

Sale Proceeds

Projected Selling Price	$ 1,165,086
Costs of Sale (4.80%)	$ 55,924
Net Sale Proceeds Before Tax	$ 1,109,162

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	$ 1,109,162
Investor Cash Outlay	$ 123,800
Net Assets	$ 985,362
Average Yield
Annual Net Assets	$ 32,845
Average Cash Flow (After Taxes)	$ 19,477
Average Annual Gain (After Taxes)	$ 52,322
Average Annual Yield (After Taxes)	10.90 %

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: 830 W Shore Dr, Delafield RENTAL

Property Report :

830 W Shore Dr, Delafield, WI 53018

Executive Summary