REAL ESTATE INVESTMENT ANALYSIS

(Page 1 of 7)

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Purchase Price:
1,200,000
Down Payment:
240,000
Interest Rate on Loan:
5.50 % p.a.
Term of Loan:
30 yrs.
Improvement Ratio:
75 %
%age of building to total property value
No. Yrs. of Depreciation:
30 yrs. Straightline for residential.
39.5 years for commercial.
Scheduled Annual Gross Income:
12,000
Vacancy/Collection losses:
5.00 %
(Annual Operating Expenses)
--------Property taxes :
2,000
Insurance:
300
Electricity:
0
Gas:
0
Oil:
0
Water:
0
Trash:
0
Management:
7.00 % of income
Repairs/Maintenance:
8.00 % of income
Advertising:
200
Telephone:
0
Other:
0
Other:
0
Other:
0
Other:
0
Annual Increase of Income:
5.00 %
p.a.
(Page 2 of 7)

Annual Increase of Expenses:

5.00 %
Annual Appreciation Rate:
5.00 %
Investor's Tax Bracket:
30.00 %
Capital Gain Tax Rate:
20.00 %
CGT Rate on Recaptured Depreciation25.00 %
Expected Capital Improvements:
5,000
Approx. Buying Costs:
3.00 %
Approx. Sales Costs:
7.00 %

p.a.
p.a.
This varies depending on the tax payer.

of total
of total

RESULTS

(Page 3 of 7)

ACQUISITION DATA

LOAN DATA

Price
###
Dn. Pymt. 240,000
Loan Amt. 960,000
Buy Costs 36,000
Cap Impr.
5,000

Interest %
No. Yrs.
Mo. P & I
Yr. P & I

5.50%
30
5,451
65,409

Yr.1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

Increase in income
5.00%
Expected Gross Income
less Vacancy/Collection losses
5.00%
EFFECTIVE GROSS INCOME
(EGI)

12,000
600
11,400

5.00%
12,600
630
11,970

5.00%
13,230
662
12,569

5.00%
13,892
695
13,197

5.00%
14,586
729
13,857

5.00%
15,315
766
14,550

5.00%
16,081
804
15,277

5.00%
16,885
844
16,041

5.00%
17,729
886
16,843

5.00%
18,616
931
17,685

ANNUAL OPERATING EXPENSES

Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

(Increase in expenses)
5.00%
Property Taxes
Insurance
Electricity
Gas
Oil
Water
Trash
Management
7.00%
Repairs/Maintenance
8.00%
Advertising
Telephone
Other
Other
Other
TOTAL OPERATING EXPENSES
Op. Expenses as %age of income

2,000
300
0
0
0
0
0
798
912
200
0
0
0
0
4,210
36.93%

5.00%
2,100
315
0
0
0
0
0
838
958
210
0
0
0
0
4,421
36.93%

5.00%
2,205
331
0
0
0
0
0
880
1,005
221
0
0
0
0
4,642
36.93%

5.00%
2,315
347
0
0
0
0
0
924
1,056
232
0
0
0
0
4,874
36.93%

5.00%
2,431
365
0
0
0
0
0
970
1,109
243
0
0
0
0
5,117
36.93%

5.00%
2,553
383
0
0
0
0
0
1,018
1,164
255
0
0
0
0
5,373
36.93%

5.00%
2,680
402
0
0
0
0
0
1,069
1,222
268
0
0
0
0
5,642
36.93%

5.00%
2,814
422
0
0
0
0
0
1,123
1,283
281
0
0
0
0
5,924
36.93%

5.00%
2,955
443
0
0
0
0
0
1,179
1,347
295
0
0
0
0
6,220
36.93%

5.00%
3,103
465
0
0
0
0
0
1,238
1,415
310
0
0
0
0
6,531
36.93%

7,190

7,550

7,927

8,323

8,739

9,176

9,635

10,117

10,623

11,154

ANNUAL OPERATING INCOME

NET OPERATING INCOME

DEPRECIATION
Land
25%
Improvement
75%
No. Yrs.
30
Yr. Depr.
31,367

300,000
941,000

(NOI) excluding financing costs

CASH FLOW (BEFORE TAXES)

Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

Net Operating Income

-Yrly. P & I
CASH FLOW (BEFORE TAXES)

7,190
65,409
-58,219

7,550
65,409
-57,860

7,927
65,409
-57,482

8,323
65,409
-57,086

8,739
65,409
-56,670

9,176
65,409
-56,233

9,635
65,409
-55,774

10,117
65,409
-55,292

10,623
65,409
-54,786

11,154
65,409
-54,255

Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

7,190
52,477
31,367
-76,654
30.00%
22,996

7,550
51,748
31,367
-75,565
30.00%
22,669

7,927
50,977
31,367
-74,417
30.00%
22,325

8,323
50,163
31,367
-73,206
30.00%
21,962

8,739
49,303
31,367
-71,930
30.00%
21,579

9,176
48,395
31,367
-70,585
30.00%
21,175

9,635
47,435
31,367
-69,166
30.00%
20,750

10,117
46,421
31,367
-67,670
30.00%
20,301

10,623
45,350
31,367
-66,094
30.00%
19,828

11,154
44,218
31,367
-64,431
30.00%
19,329

MORTGAGE PRINCIPAL REDUCTION Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

960,000 947,068
947,068 933,406
12,932 13,662

933,406
918,974
14,432

918,974
903,728
15,246

903,728
887,622
16,106

887,622
870,607
17,015

870,607
852,633
17,975

852,633
833,644
18,988

833,644
813,585
20,060

813,585
792,394
21,191

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

(Increase)
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
Start of Year Value
1,200,000 1,260,000 1,323,000 1,389,150 1,458,608 1,531,538 1,608,115 1,688,521
End of Year Value
1,260,000 1,323,000 1,389,150 1,458,608 1,531,538 1,608,115 1,688,521 1,772,947
TOTAL ANNUAL APPRECIATION
60,000 63,000
66,150
69,458
72,930
76,577
80,406
84,426

5.00%
1,772,947
1,861,594
88,647

5.00%
1,861,594
1,954,674
93,080

TAX BENEFIT
Net Operating Income
-Annual Interest
-Annual Depreciation
Taxable Income
x Investor's Tax Bracket
TAX BENEFIT

30.00%

Start of Yr. Balance

-End of Yr. Balance
TOTAL PRINCIPAL REDUCTION

PROPERTY APPRECIATION

Yr. 1

Yr. 2

FINANCIAL ANALYSIS

(Page 5 of 7)

RETURN ON INITIAL EQUITY (Assume Initial Equity = Down Payment + Capital Improvement)
Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

Cash Flow (Before Taxes)

Tax Benefit
Debt Reduction
Appreciation
$ RETURN ON INITIAL EQUITY

-58,219
22,996
12,932
60,000
37,709

-57,860
22,669
13,662
63,000
41,471

-57,482
22,325
14,432
66,150
45,425

-57,086
21,962
15,246
69,458
49,580

-56,670
21,579
16,106
72,930
53,946

-56,233
21,175
17,015
76,577
58,534

-55,774
20,750
17,975
80,406
63,356

-55,292
20,301
18,988
84,426
68,423

-54,786
19,828
20,060
88,647
73,749

-54,255
19,329
21,191
93,080
79,345

INITIAL EQUITY:
Down Payment
Capital Improvement
TOTAL INITIAL EQUITY

240,000 240,000
5,000
5,000
245,000 245,000

240,000
5,000
245,000

240,000
5,000
245,000

240,000
5,000
245,000

240,000
5,000
245,000

240,000
5,000
245,000

240,000
5,000
245,000

240,000
5,000
245,000

240,000
5,000
245,000

% RETURN ON INITIAL EQUITY

15.39%

18.54%

20.24%

22.02%

23.89%

25.86%

27.93%

30.10%

32.39%

16.93%

RETURN ON TOTAL EQUITY (Assume Total Equity = Start of Year Value - Start of Year Loan Balance)
Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

-58,219
22,996
12,932
60,000
37,709

-57,860
22,669
13,662
63,000
41,471

-57,482
22,325
14,432
66,150
45,425

-57,086
21,962
15,246
69,458
49,580

-56,670
21,579
16,106
72,930
53,946

-56,233
21,175
17,015
76,577
58,534

-55,774
20,750
17,975
80,406
63,356

-55,292
20,301
18,988
84,426
68,423

-54,786
19,828
20,060
88,647
73,749

-54,255
19,329
21,191
93,080
79,345

TOTAL EQUITY:
Beginning of Year Value inc. Cap. Imp.
1,205,000 1,265,000 1,328,000 1,394,150 1,463,608 1,536,538 1,613,115 1,693,521
Begining of Year Balance
960,000 947,068
933,406 918,974 903,728 887,622 870,607
852,633
TOTAL EQUITY
245,000 317,932
394,594 475,176 559,879 648,916 742,508
840,888

1,777,947
833,644
944,302

1,866,594
813,585
1,053,009

7.81%

7.54%

Cash Flow (Before Taxes)

Tax Benefit
Debt Reduction
Appreciation
$ RETURN ON TOTAL EQUITY

% RETURN ON TOTAL EQUITY

15.39%

13.04%

11.51%

10.43%

9.64%

9.02%

8.53%

8.14%

ESTIMATED SALE PROCEEDS (AFTER EXPENSES & TAXES)

Yr. 1
Yr. 2
Yr. 3
Yr. 4
Yr. 5
Yr. 6
Yr. 7
Yr. 8
ADJUSTED COST BASIS
Original Basis
1,236,000 1,236,000 1,236,000 1,236,000 1,236,000 1,236,000 1,236,000 1,236,000
+ Capital Improvements`
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
+ Sales Costs
7.00%
88,200 92,610
97,241 102,103 107,208 112,568 118,196
124,106
- Accum. Depreciation
31,367 62,733
94,100 125,467 156,833 188,200 219,567
250,933
= ADJUSTED COST BASIS
1,297,833 1,270,877 1,244,141 1,217,636 1,191,374 1,165,368 1,139,630 1,114,173

Yr. 9

Yr. 10

1,236,000
5,000
130,312
282,300
1,089,012

1,236,000
5,000
136,827
313,667
1,064,160

True CAPITAL GAIN

Sales Price
Non adjusted cost
True Gain or loss

1,260,000 1,323,000 1,389,150 1,458,608 1,531,538 1,608,115 1,688,521 1,772,947

1,329,200 1,333,610 1,338,241 1,343,103 1,348,208 1,353,568 1,359,196 1,365,106
-69,200 -10,610
50,910 115,505 183,330 254,547 329,324
407,840

1,861,594
1,371,312
490,282

1,954,674
1,377,827
576,846

CAPITAL GAIN for tax purposes

Sales Price
- Adjusted Cost Basis
CAPITAL GAIN (tax purposes)

1,260,000 1,323,000 1,389,150 1,458,608 1,531,538 1,608,115 1,688,521 1,772,947

1,297,833 1,270,877 1,244,141 1,217,636 1,191,374 1,165,368 1,139,630 1,114,173
-37,833 52,123
145,010 240,972 340,164 442,747 548,891
658,774

1,861,594
1,089,012
772,582

1,954,674
1,064,160
890,513

772,582
168,631

890,513
193,786

1,861,594
130,312
813,585
917,698
168,631
749,066

1,954,674
136,827
792,394
1,025,453
193,786
831,667

CAPITAL GAIN TAX

Capital Gain for tax purposes
= Tax on Capital Gain

-37,833

52,123
13,561

145,010
33,707

240,972
54,468

340,164
75,874

442,747
97,959

548,891
120,756

658,774
144,301

EST. NET SALE PROCEEDS (after tax)

Sales Price
1,260,000 1,323,000 1,389,150 1,458,608 1,531,538 1,608,115 1,688,521 1,772,947
- Sales Costs
88,200 92,610
97,241 102,103 107,208 112,568 118,196
124,106
- Ending Loan Balance
947,068 933,406
918,974 903,728 887,622 870,607 852,633
833,644
= Proceeds Before Taxes
224,732 296,984
372,935 452,777 536,708 624,940 717,692
815,196
- Capital Gain Tax
0 13,561
33,707
54,468
75,874
97,959 120,756
144,301
= EST NET SALE PROCEEDS A/T 224,732 283,422
339,228 398,309 460,834 526,980 596,935
670,895
You must hold the property for a year and a day to qualify for long term capital gains tax treatment.
DEBT SERVICE COVERAGE RATIO (DSC)

Net Operating Income

Debt Service (Yr. P & I)
DSC

Yr. 1

Yr. 2

Yr. 3

Yr. 4

Yr. 5

Yr. 6

Yr. 7

Yr. 8

Yr. 9

Yr. 10

7,190
65,409
0.11

7,550
65,409
0.12

7,927
65,409
0.12

8,323
65,409
0.13

8,739
65,409
0.13

9,176
65,409
0.14

9,635
65,409
0.15

10,117
65,409
0.15

10,623
65,409
0.16

11,154
65,409
0.17

(Page 7 of 7)

Prepared For:
Prepared By:
Property Address:

You, The XXXr Co. (xxx)xxx-xxxx

Date:

7/28/2011

This report is based on certain assumptions.The projections are estimates only

Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.

Investment performance
100,000

Dollars

80,000
Row 92
Row 106
Row 160

60,000
40,000
20,000
0
1

5
years

10

Return on equity includes appreciation, principal reduction and tax benefit.