370

MANZANITA ST, HENDERSON, 89014 3 bedroom 2 F 1 H bath 1544 SF home built in 1984 $ 102,900 Asking price
Notes: 1 2 3

All-cash purchase
$ 1,100 $ 343 $ 757 $ 9,084 $ 102,900 8.8% $ 180,119 $ 77,219 13.1% Rent (see page 2 for comparables) Expenses (see page 2 for detail) Monthly net operating income Yearly net income Asking price (Investment) Capitalization Rate = net income / asking price Resale value in year 10 (net of 8% liquidation costs) Profit from sale in year 10 Internal Rate of Return

4 5 6 Notes: 7 8 9 1 2 3 10 11 12 13 8 14 5 6

30-year fixed $ 102,900 Asking price $ 82,320 Maximum loan $ 20,580 Down payment $ 1,100 $ 343 $ 757 $ 442 $ 315 $ 99 $ 414 $ 4,968 $ 20,580 24.1% $ 113,436 34.1%

Financed purchase

15-year fixed $ 102,900 $ 82,320 $ 20,580 4.50% $ 1,100 $ 343 $ 757 $ 630 $ 127 $ 321 $ 448 $ 5,380 $ 20,580 26.1% $ 146,466 37.4%
larry@IdealHomeBrokers.com (949) 351-6913

5.00% Investment loan interest rate Rent Expenses Monthly net income Payment Monthly cashflow Principal amortization in payment Cashflow plus amortization Yearly cashflow plus amortization Down payment (Investment) Cash-On-Cash Return = cashflow / down payment Cash at Sale in year 10 (profit plus amortization) Internal Rate of Return
1 of 4

Ideal Home Brokers Property Offering Report

Notes: 1

Calculations $ 1,100 Rent $ 90 $ 60 $ - $ 88 $ - $ 238

Net Operating Income Detail

Terms

Cash Operating Expenses

15 16 17 18 19

Property Tax Homeowners Insurance Homeowners Association Fees Property Management Fees (% of Gross Rent) Other Expenses Monthly Cash Expenses

1.0% 0.65% varies 8.0% 21.6% 5.0% 4.5% 9.5% 31.2% 68.8% Resale Date
7/28/11 7/27/11 6/30/11 6/30/11 6/21/11 6/16/11 5/26/11

Reserve Expenses
20 21

$ 55 Maintenance and Replacement Reserves $ 50 Vacancy and Collection Loss $ 105 Monthly Reserve Expenses $ 343 Total Expenses

$ 757 Net Operating Income

Comparable Resales
371 TIERRA ST -- 4 bed 3 bath 1544 SF -- 1984 List: $87500 391 MANZANITA ST -- 3 bed 3 bath 1364 SF -- 1984 List: $95000 359 CAVOS WY -- 3 bed 2 bath 1162 SF -- 1986 List: $99950 1740 LA CRUZ DR -- 3 bed 3 bath 1788 SF -- 1989 List: $95900 1733 DUARTE DR -- 3 bed 3 bath 1421 SF -- 1985 List: $115000 1693 DUARTE DR -- 4 bed 3 bath 1605 SF -- 1988 List: $99000 371 MANZANITA ST -- 3 bed 3 bath 1544 SF -- 1984 List: $109000

Amount
$ 83,000 $ 95,500 $ 95,000 $ 93,900 $ 111,000 $ 99,000 $ 109,000

Comparable Rentals
383 TIERRA ST -- 3 bed 3 bath 1544 SF -- 1984 List: $1095 375 EL PICO DR -- 3 bed 3 bath 1605 SF -- 1986 List: $1175 1721 DUARTE DR -- 3 bed 3 bath 1770 SF -- 1985 List: $1100 378 TIERRA ST -- 3 bed 3 bath 1544 SF -- 1984 List: $1295 1740 DUARTE DR -- 3 bed 3 bath 1594 SF -- 1985 List: $1095 366 CAVOS WY -- 4 bed 3 bath 1788 SF -- 1986 List: $1395 372 MANZANITA ST -- 2 bed 2 bath 1160 SF -- 1984 List: $1075

Lease Date

Amount

4/20/11 $ 1,095 3/24/11 $ 1,175 11/29/10 $ 1,100 11/9/10 $ 1,250 7/22/10 $ 1,095 8/30/10 $ 1,395 8/27/10 $ 1,075

General Disclaimer
This report represents the considered opinion of Ideal Home Brokers. We make no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates may not represent the current or future performance of the property. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs. Ideal Home Brokers Property Offering Report
2 of 4

larry@IdealHomeBrokers.com (949) 351-6913

Projected 10-year appreciation to near rental parity with liquidation resale

$250,000 Rental Parity
2.5% annual rent growth

Resale Value

$232,438

$200,000

$195,781 $181,580

$150,000 $102,900 $100,000

Undervaluafon Resale near rental parity in year 10 5 years of double-digit appreciafon

$50,000

3 year trough to breakeven

$- 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Financing Terms and Cash-On-Cash Returns

40.0% 35.0% Cash-On-Cash Return 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0%

lower interest rates generate higher returns

lower down payments generate higher returns

Interest Ra te
Ideal Home Brokers Property Offering Report

larry@IdealHomeBrokers.com (949) 351-6913

3 of 4

Notes: Gross Rent is estimated from comparable rentals or taken from actual rent rolls. 1 2 3
Summary of expenses from page 2 Net Operating Income is the rental income minus the cash expenses. This figure is independent of taxes or financing which vary considerably from deal to deal. Many rental properties are purchased without debt, and the Net Operating Income is necessary to compute the Capitalization Rate. The capitalization (cap) rate is the (yearly) Net Operating Income divided by the purchase price. It is the simplest measure of an investment's financial performance, and it provides a convenient comparison to competing investment alternatives. A cap rate is like an interest rate on a checking account, a mutual fund return, or a bond yield. The cap rate is inversely related to price; in other words, high cap rates are synonymous with low prices and visa versa. The cap rate an investor will accept varies from person to person. There is no single appropriate rate to apply to value. Instead, we show a range of values at different cap rates to show the current investment return someone can expect from this property. The resale value at in year 10 assumes prices appreciate strongly after the supply problems are resolved. (see page 3). The Internal Rate of Return evaluates the timing and the amount of each source of income and calculates a rate which would balance these various sources of income with the initial investment. IRR is the best method for calculating the returns on investments with variable income. Maximum loan based on lender limitations or available cashflow. Generally smaller for 15-year amortization. The down payment reflects the minimum up-front investment required based on financing limitations. Mortgage interest rates vary based on amortization schedule. The quicker the loan amortizes, the lower the interest rate. The monthly payment is the based on the largest loan a lender offers that still provides for positive cashflow The monthly cashflow shows the amount left over after all payments and reserves have been met. This is the calculated principal amortization in the first payment. This amount increases in subsequent payments. The actual monthly gain includes both left-over cashflow and amortization in the loan. The Cash-On-Cash Return is similar to a capitalization rate in that it shows a return on investment, but it is measured by comparing the Total Profit and Loss after Expenses, Debt and Taxes and compares that to the cash investment. This is the important rate of return for investors who are not purchasing with all cash. As long as debt is less expensive than the cap rate, the cash-on-cash returns can be magnified by increasing debt. This is an appropriate use of leverage to increase investment returns. This is the property tax amount set by the local jurisdiction. Estimated homeowners insurance. Homeowners association dues from property investigation. Property management fees vary, but 8%-10% of the monthly rent is a common fee. Monthly cash expenses are the actual outlays of cash each month to support the property. Estimated maintenance and replacement reserves. These are higher in single-family detached homes and in older properties. Vacancy and Collection Loss is an allowance for tenant turnover.

5 6 7 8 9 10 11 12 13 14

15 16 17 18 19 20 21

Ideal Home Brokers Property Offering Report

4 of 4

larry@IdealHomeBrokers.com (949) 351-6913