Clifton Portfolio, Cincinnati OH 45220

Clifton Portfolio, Cincinnati, OH 45220

Multifamily:

Investment strategy: Rental Property

UC student house portfolio. All currently occupied, great location.

Purchase Price$ 2,350,000

Rent$ 22,310/mo

Monthly Cash Flow$ 6,522

Cash on Cash Return13.32 %

Financial Analysis

Cash on Cash Return	13.32 %
Internal Rate of Return (IRR)	19.54 %
Capitalization Rate	7.63 %
Gross Rent Multiplier (GRM)	8.78
Debt-coverage Ratio (DCR)	1.78
Operating Expense Ratio (OER)	30.98 %

Financial Breakdown

Purchase Price	$ 2,350,000
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).	$ 2,350,000
Financing	$ 1,762,500
Total Cash Needed Cash out of Pocket Shows rehabber's cash outlay. Cash out of Pocket Shows rehabber's cash outlay.	$ 587,500
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.	$ 587,500
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	$ 22,310/mo
Gross Operating Income (GOI)	$ 259,688
Total Expenses	$ 80,457
Net Operating Income (NOI)	$ 179,231
Annual Debt Service	$ 100,973
Cash Flow Before Taxes (CFBT)	$ 78,258
Income Tax Liability	$ 10,233
Cash Flow After Taxes (CFAT)	$ 68,025

Purchase Price	$ 2,350,000
Address	Clifton Portfolio , Cincinnati, 45220, OH
Type	Multifamily
Number of Units	28

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.	$ 267,720
Total Gross Income	$ 267,720
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.	$ 8,032
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.	$ 259,688	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).
Utilities	$ 18,396	7.08 %
Insurance	$ 14,100	5.43 %
Repairs	$ 3,000	1.16 %
Property tax	$ 44,961	17.31 %
Total Expenses	$ 80,457	30.98 %
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.	$ 179,231	69.02 %

Cash Flow (Year 1)

Net Operating Income	$ 179,231	69.02 %
Annual Debt Service	$ 100,973	38.88 %
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.	$ 78,258	30.14 %
Income Tax Liability	$ 10,233	3.94 %
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.	$ 68,025	26.19 %

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).	30.98 %
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.	69.86 %

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.	$ 986,299
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.	19.54 %
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	2.68
Annual Depreciation	$ 68,364

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.	13.32 %
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.	25.32 %
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.	7.63 %
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.	11.39 %
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.	8.78

Financing
Down Payment		$ 587,500
Loan		$ 1,762,500
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		1.78

Loan Financing of: Purchase price ($ 2,350,000)
Type	Amortized
Loan Amount	$ 1,762,500
Down payment (25%)	$ 587,500
Amortization	30 years
Interest Rate	4.00 %
Monthly Payment	$ 8,414.44

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	267,720	273,074	278,536	284,107	289,789	295,585	301,496	307,526	313,677	319,950
Vacancy Loss	0	8,032	8,192	8,356	8,523	8,694	8,868	9,045	9,226	9,410	9,599
Gross Operating Income	0	259,688	264,882	270,180	275,583	281,095	286,717	292,451	298,300	304,266	310,352
Expenses	0	80,457	82,066	83,707	85,382	87,089	88,831	90,608	92,420	94,268	96,154
Net Operating Income	0	179,231	182,816	186,472	190,202	194,006	197,886	201,844	205,881	209,998	214,198
Loan Payment	0	100,973	100,973	100,973	100,973	100,973	100,973	100,973	100,973	100,973	100,973
Payment Interest Part	0	69,935	68,671	67,354	65,985	64,559	63,076	61,532	59,925	58,252	56,512
Payment Principal Part	0	31,038	32,303	33,619	34,989	36,414	37,898	39,442	41,049	42,721	44,461
Cash Flow
Repairs/Construction	0	0	0	0	0	0	0	0	0	0	0
Cash Flow Before Taxes	-587,500	78,258	81,843	85,499	89,228	93,033	96,913	100,870	104,907	109,025	113,225
Depreciation	0	68,364	68,364	68,364	68,364	68,364	68,364	68,364	68,364	68,364	68,364
Taxes	0	10,233	11,445	12,688	13,963	15,271	16,612	17,987	19,398	20,845	22,331
Cash Flow After Taxes	-587,500	68,025	70,397	72,811	75,265	77,762	80,301	82,883	85,509	88,179	90,894

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%)	$ 3,158,203
Cap Rate (7.63%) & NOI	$ 2,807,315
Gross Rent Multiplier	$ 2,809,162

Sale Proceeds

Projected Selling Price	$ 3,158,203
Costs of Sale (6.00%)	$ 189,492
1. Loan Balance Payoff	$ 1,388,567
Net Sale Proceeds Before Tax	$ 1,580,144

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	$ 1,580,144
Investor Cash Outlay	$ 587,500
Net Assets	$ 992,644
Average Yield
Annual Net Assets	$ 99,264
Average Cash Flow (After Taxes)	$ 70,113
Average Annual Gain (After Taxes)	$ 169,378
Average Annual Yield (After Taxes)	7.21 %

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: Clifton Portfolio, Cincinnati RENTAL

Property Report :

Clifton Portfolio, Cincinnati, OH 45220

Executive Summary