Fully Stabilized 24-Unit Property at 11% Cap Rate!

Transcription

1 Fully Stabilized 24-Unit Property at 11% Cap Rate! To Insert a Picture here, click inside this box with your mouse, then click on "INSERT PIC" button on the right and select the picture 24 Units consisting of 1BR and 2BR Apartments Centrally located to 2 major interstates and a large university! All utilities individually metered except for water/sewer Majority of units recently upgraded! Great Cash Flow with additional upside on rents! Exclusively Presented By: Daniil@EvolveAcquisitions.com

2 Prepared by: Contact Info: 2320 Pump Road #169 Glen Allen, VA To Insert a Picture here, click inside this box with your mouse, then click on "INSERT PIC" button on the right and select the picture Unit Mix: Notes/Description of Property: 24 Units, comprising of 12 1-Bedroom apartments and 12 2-Bedroom units. Solid rental history on this recently updated property. Most leases are month-to-month, though majority of tenants have been in place for over a year. Notes on Area: Located near a large university, 2 minutes to 2 major interstates, and 3 minutes to downtown Richmond. This is your opportunity to purchase a well-located building with a steady rent roll AND upside on the rental income. All utilities paid by tenants except for water/sewer. 16 out of 24 units have been updated with new flooring, thermal windows and paint within the last 24 months. Property comes with 24 parking spaces in the rear. Work suggested upon acquisition includes roof repairs, exterior trim work and updates to the remaining units. Purchase/Offer Price $1,050,000 Capitalization Rate 11.10% Downpayment $210,000 Gross Rent Multiplier 4.56 Initial Capital Improvements and Reserves $100,000 $/Sq Foot $66.09 Total Closing Costs $48,000 $/Unit $47,917 Additional Upfront Fee to Buyer (Optional) $0 Total Cash Investment $358,000 Cash-on-Cash vs. ROE Current / First Year Gross Rent $252,000 Current / First Year Operating Expenses $99,180 Current / First Year Net Operating Income $127,620 Projected Holding Period 20 years Terminal Cap Rate Assumed 11.00% Projected Resale Price $1,690,166 Projected Leveraged IRR of Investment * 21.64% Projected Leveraged MIRR of Investment * 13.32% Projected Cumulative Cash-on-Cash Return * % 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Cash-on-Cash Return (pretax) Return on Equity (pretax) Selected Projected Financial Measures Year 1 Year 12 Year 25 Year 40 Annual Cash-on-Cash Return * 17.64% 26.31% N/A N/A Cumulative Cash-on-Cash Return (ROI) * 17.64% % N/A N/A DCR N/A N/A LTV 72.08% 53.51% N/A N/A Return on Equity * 19.35% 13.33% N/A N/A Economic Occupancy % 90% 90% N/A N/A Effective Rent per sq foot $13.03 $16.21 N/A N/A * All figures pre-tax

3 Salem Heights To Insert a Picture here, click inside this box with your mouse, then click on "INSERT PIC" button on the right and select the picture New laminate flooring in many units Updated kitchens Half-baths in 2-BR Units Mantle Fireplaces Typical Full Bath Bay Windows

4 Annual Property Operating Data Report Annual Gross Schedule Income $252,000 % of GSI -Vacancy $25,200 10% Price $1,050,000 -Concessions $0 0% Sq Feet 17,400 -Management $0 0% # of Units 24 Effective Gross Income $226,800 $/Unit $47,917 Other Income $0 0% Gross Operating Income $226,800 Capitalization Rate (Cap Rate) 11.10% Economic Occupancy % 90.00% Gross Rent Multiplier (GRM) 4.56 Payback Period 5.67 Operating Expenses: % of GOI Debt Coverage Ratio (DCR) 1.98 Accounting $1,200 1% Advertising $7,200 3% Downpayment $210,000 Insurance Hazard $18,000 8% Initial Cap Improvements/Reserves $100,000 Janitorial $0 0% Total Closing Costs $48,000 Legal $1,500 1% Additional Upfront Fee to Buyer (Optional) $0 Licenses $0 0% Total Investment $358,000 Miscellaneous $12,000 5% Pre-Tax Cash/Cash Return 17.64% Repairs and Maintenance $13,200 6% Supplies Maintenance $0 0% Taxes - Property $14,400 6% Lawn Care $3,600 2% Other $8,400 4% Other $0 0% Other $0 0% Other $0 0% Utilities: Water/Sewer $17,280 8% Electricity $0 0% Gas $0 0% Fuel Oil $0 0% Other Utilities $0 0% Total Operating Expenses $99,180 44% Net Operating Income $127,620 56% Debt Service (1st Mortgage) ($64,479) Debt Service (2nd Mortgage) $0 Total Debt Service ($64,479) Cash Flow Before Taxes $63,141

5 Unit Type # # of units Unit type Square Ft. Monthly Rent Annual Rent Year (End) /1/2011 6/1/2012 6/1/2013 6/1/2014 6/1/2015 6/1/2016 6/1/2017 6/1/2018 6/1/2019 6/1/2020 Annual Growth OPERATING INCOME REPORT Br ,000 2% 108, , , , , , , , , , Br 850 1, ,000 2% 144, , , , , , , , , , % % % % % % % % % % Gross Scheduled Incom 17,400 21, , , , , , , , , , , ,163 Vacancy Rate Vacancy Loss Concessions Rate Concessions Amount Management Fee Other Income Gross Operating Income 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 25,200 25,704 26,218 26,742 27,277 27,823 28,379 28,947 29,526 30,116 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% % , , , , , , , , , ,047 Physical Occupancy % 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% Economic Occupancy % 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% Effective Rent per Square Foot $13.03 $13.30 $13.56 $13.83 $14.11 $14.39 $14.68 $14.97 $15.27 $15.58 Total Growth in Gross Operating Income 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Unit Type # # of units Unit type Square Ft. Monthly Rent Annual Rent Annual Growth Br ,000 2% 131, , , , , , , , , , Br 850 1, ,000 2% 175, , , , , , , , , , % % % % % % % % % % Gross Scheduled Incom 1,450 21, , , , , , , , , , , ,116 Vacancy Rate Vacancy Loss Concessions Rate Concessions Amount Management Fee Other Income Gross Operating Income 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 30,719 31,333 31,960 32,599 33,251 33,916 34,594 35,286 35,992 36,712 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% % , , , , , , , , , ,405 Physical Occupancy % 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% Economic Occupancy % 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% Effective Rent per Square Foot $15.89 $16.21 $16.53 $16.86 $17.20 $17.54 $17.89 $18.25 $18.62 $18.99 Total Growth in Gross Operating Income 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%

6 Current Monthly Current Annually Year (End) /1/2011 6/1/2012 6/1/2013 6/1/2014 6/1/2015 6/1/2016 6/1/2017 6/1/2018 6/1/2019 6/1/2020 Annual Growth Rate (%) OPERATING EXPENSES REPORT Accounting 100 1,200 2% 1,200 1,224 1,248 1,273 1,299 1,325 1,351 1,378 1,406 1,434 Advertising 600 7,200 2% 7,200 7,344 7,491 7,641 7,794 7,949 8,108 8,271 8,436 8,605 Insurance Hazard 1,500 18,000 2% 18,000 18,360 18,727 19,102 19,484 19,873 20,271 20,676 21,090 21,512 Janitorial - - 2% Legal 125 1,500 2% 1,500 1,530 1,561 1,592 1,624 1,656 1,689 1,723 1,757 1,793 Licenses - - 2% Miscellaneous 1,000 12,000 2% 12,000 12,240 12,485 12,734 12,989 13,249 13,514 13,784 14,060 14,341 Repairs and Maintenance 1,100 13,200 2% 13,200 13,464 13,733 14,008 14,288 14,574 14,865 15,163 15,466 15,775 Supplies Maintenance - - 2% Taxes - Property 1,200 14,400 2% 14,400 14,688 14,982 15,281 15,587 15,899 16,217 16,541 16,872 17,209 Lawn Care 300 3,600 2% 3,600 3,672 3,745 3,820 3,897 3,975 4,054 4,135 4,218 4,302 Other 700 8,400 2% 8,400 8,568 8,739 8,914 9,092 9,274 9,460 9,649 9,842 10,039 Other - - 2% Other - - 2% Other - - 2% Utilities: Water/Sewer 1,440 17,280 2% 17,280 17,626 17,978 18,338 18,704 19,079 19,460 19,849 20,246 20,651 Electricity - - 2% Gas - - 2% Fuel Oil - - 2% Other Utilities - - 2% Reserves 200 2,400 2% 2,400 2,448 2,497 2,547 2,598 2,650 2,703 2,757 2,812 2,868 Total Gross Operating Expenses 99, , , , , , , , , ,529 Total Growth in Operating Expenses 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Current Monthly Current Annually Annual Growth Rate (%) Accounting 100 1,200 2% 1,463 1,492 1,522 1,552 1,583 1,615 1,647 1,680 1,714 1,748 Advertising 600 7,200 2% 8,777 8,952 9,131 9,314 9,500 9,690 9,884 10,082 10,283 10,489 Insurance Hazard 1,500 18,000 2% 21,942 22,381 22,828 23,285 23,751 24,226 24,710 25,204 25,708 26,223 Janitorial - - 2% Legal 125 1,500 2% 1,828 1,865 1,902 1,940 1,979 2,019 2,059 2,100 2,142 2,185 Licenses - - 2% Miscellaneous 1,000 12,000 2% 14,628 14,920 15,219 15,523 15,834 16,150 16,473 16,803 17,139 17,482 Repairs and Maintenance 1,100 13,200 2% 16,091 16,413 16,741 17,076 17,417 17,765 18,121 18,483 18,853 19,230 Supplies Maintenance - - 2% Taxes - Property 1,200 14,400 2% 17,554 17,905 18,263 18,628 19,000 19,381 19,768 20,163 20,567 20,978 Lawn Care 300 3,600 2% 4,388 4,476 4,566 4,657 4,750 4,845 4,942 5,041 5,142 5,245 Other 700 8,400 2% 10,240 10,444 10,653 10,866 11,084 11,305 11,531 11,762 11,997 12,237 Other - - 2% Other - - 2% Other - - 2% Utilities: Water/Sewer 1,440 17,280 2% 21,064 21,486 21,915 22,354 22,801 23,257 23,722 24,196 24,680 25,174 Electricity - - 2% Gas - - 2% Fuel Oil - - 2% Other Utilities - - 2% Reserves 200 2,400 2% 2,926 2,984 3,044 3,105 3,167 3,230 3,295 3,361 3,428 3,496 Total Gross Operating Expenses 120, , , , , , , , , ,487 Total Growth in Operating Expenses 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%

7 INCOME STATEMENT Year Year (End) /1/2010 6/1/2011 6/1/2012 6/1/2013 6/1/2014 6/1/2015 6/1/2016 6/1/2017 6/1/2018 6/1/2019 6/1/2020 Gross Scheduled Income 252, , , , , , , , , ,163 + Other Income Vacancy Loss (25,200) (25,704) (26,218) (26,742) (27,277) (27,823) (28,379) (28,947) (29,526) (30,116) - Concessions Management Fees Effective Gross Income 226, , , , , , , , , ,047 - Operating Expenses (99,180) (101,164) (103,187) (105,251) (107,356) (109,503) (111,693) (113,927) (116,205) (118,529) Net Operating Income 127, , , , , , , , , ,518 - Mortgage Interest (60,779) (60,501) (60,203) (59,883) (59,538) (59,168) (58,770) (58,342) (57,882) (57,387) - Depreciation Building (23,098) (24,103) (24,103) (24,103) (24,103) (24,103) (24,103) (24,103) (24,103) (24,103) - Depreciation Improvements Taxable Income (Before write-offs) 43,743 45,569 48,470 51,446 54,499 57,633 60,849 64,151 67,543 71,028 Losses Carried Over Taxable Income (After write-offs) 43,743 45,569 48,470 51,446 54,499 57,633 60,849 64,151 67,543 71,028 Gross Scheduled Income 307, , , , , , , , , ,116 + Other Income Vacancy Loss (30,719) (31,333) (31,960) (32,599) (33,251) (33,916) (34,594) (35,286) (35,992) (36,712) - Concessions Management Fees Effective Gross Income 276, , , , , , , , , ,405 - Operating Expenses (120,900) (123,318) (125,784) (128,300) (130,866) (133,483) (136,153) (138,876) (141,653) (144,487) Net Operating Income 155, , , , , , , , , ,918 - Mortgage Interest (56,855) (56,284) (55,670) (55,009) (54,300) (53,537) (52,716) (51,835) (50,887) (49,868) - Depreciation Building (24,103) (24,103) (24,103) (24,103) (24,103) (24,103) (24,103) (24,103) (24,103) (24,103) - Depreciation Improvements Taxable Income (Before write-offs) 74,610 78,293 82,081 85,978 89,990 94,121 98, , , ,948 Losses Carried Over Taxable Income (After write-offs) 74,610 78,293 82,081 85,978 89,990 94,121 98, , , ,948 Year (End) Gross Scheduled Income + Other Income - Vacancy Loss - Concessions - Management Fees Effective Gross Income - Operating Expenses Net Operating Income - Mortgage Interest - Depreciation Building - Depreciation Improvements Taxable Income (Before write-offs) Losses Carried Over Taxable Income (After write-offs) Year (End) Gross Scheduled Income + Other Income - Vacancy Loss - Concessions - Management Fees Effective Gross Income - Operating Expenses Net Operating Income - Mortgage Interest - Depreciation Building - Depreciation Improvements Taxable Income (Before write-offs) Losses Carried Over Taxable Income (After write-offs)

8 INITIAL CAPITAL OUTLAY SUMMARY Downpayment ($210,000.00) Inspection and Appraisal ($6,000.00) Origination fee - 1st Mortgage ($8,400.00) Origination fee - 2nd Mortgage $0.00 Discount fee - 1st Mortgage ($8,400.00) Discount fee - 2nd Mortgage $0.00 Closeting costs & misc. fees ($25,200.00) Total Closing Costs (Not financed) ($48,000.00) Cash back from Seller $0.00 Initial Capital Improvements ($100,000.00) Initial Capital Reserves Deposited Additional Upfront Fee to Buyer (Op $0.00 $0.00 CASHFLOW REPORT ***Negative numbers denote an outflow of cash, positive an inflow TOTAL CASH OUTLAY ($358,000.00) Year (End) /1/2010 6/1/2011 6/1/2012 6/1/2013 6/1/2014 6/1/2015 6/1/2016 6/1/2017 6/1/2018 6/1/2019 6/1/2020 Initial Outlay -358,000 Additional Capital Improvements Total Cash Outlay -358, , , , , , , , , , ,000 Gross Operating Income 226, , , , , , , , , ,047 Gross Operating Expenses 99, , , , , , , , , ,529 Net Operating Income 127, , , , , , , , , ,518 Debt Service -64,479-64,479-64,479-64,479-64,479-64,479-64,479-64,479-64,479-64,479 Cashflow (pre-tax) 63,141 65,693 68,297 70,952 73,661 76,424 79,242 82,116 85,048 88,039 Pre-Tax Cash-on-Cash Return 17.64% 18.35% 19.08% 19.82% 20.58% 21.35% 22.13% 22.94% 23.76% 24.59% Income Taxes (Credits) 15,310 15,949 16,965 18,006 19,075 20,171 21,297 22,453 23,640 24,860 Cashflow (after-tax) 47,831 49,744 51,332 52,946 54,586 56,252 57,945 59,663 61,408 63,179 After-Tax Cash-on-Cash Return 13.36% 13.90% 14.34% 14.79% 15.25% 15.71% 16.19% 16.67% 17.15% 17.65% Proceeds of Sale (pre-tax) Capital Gains Taxes Proceeds of Sale (after-tax) Total Cashflows (pre-tax) 63,141 65,693 68,297 70,952 73,661 76,424 79,242 82,116 85,048 88,039 Cumulative Pre-Tax Cash-on-Cash Return (ROI) 17.64% 35.99% 55.06% 74.88% 95.46% % % % % % Total Cashflows (after-tax) 47,831 49,744 51,332 52,946 54,586 56,252 57,945 59,663 61,408 63,179 Cumulative After-Tax Cash-on-Cash Return (ROI) 13.36% 27.26% 41.59% 56.38% 71.63% 87.34% % % % % Reserves Balance 0 2,400 4,896 7,491 10,188 12,989 15,899 18,920 22,055 25,308 28,682 Total Cash Position (inc Reserves) * -358, , , ,378-79,729-3,266 76, , , , ,296 Total Equity Position (Inc Reserves) 210, , , , , , , , , , ,545 Return on Equity (ROE) * 19.35% 18.46% 17.67% 16.98% 16.36% 15.80% 15.30% 14.84% 14.42% 14.03% *pre-tax Initial Outlay Additional Capital Improvements Total Cash Outlay -358, , , , , , , , , ,000 Gross Operating Income 276, , , , , , , , , ,405 Gross Operating Expenses 120, , , , , , , , , ,487 Net Operating Income 155, , , , , , , , , ,918 Debt Service -64,479-64,479-64,479-64,479-64,479-64,479-64,479-64,479-64,479-64,479 Cashflow (pre-tax) 91,089 94,200 97, , , , , , , ,439 Pre-Tax Cash-on-Cash Return 25.44% 26.31% 27.20% 28.10% 29.03% 29.97% 30.93% 31.90% 32.90% 33.92% Income Taxes (Credits) 26,114 27,402 28,728 30,092 31,496 32,942 34,432 35,967 37,549 39,182 Cashflow (after-tax) 64,976 66,798 68,646 70,519 72,417 74,339 76,284 78,253 80,245 82,258 After-Tax Cash-on-Cash Return 18.15% 18.66% 19.17% 19.70% 20.23% 20.76% 21.31% 21.86% 22.41% 22.98% Proceeds of Sale (pre-tax) 908,922 Capital Gains Taxes 183,961 Proceeds of Sale (after-tax) 724,961 Total Cashflows (pre-tax) 91,089 94,200 97, , , , , , ,794 1,030,361 Cumulative Pre-Tax Cash-on-Cash Return (ROI) % % % % % % % % % % Total Cashflows (after-tax) 64,976 66,798 68,646 70,519 72,417 74,339 76,284 78,253 80, ,219 Cumulative After-Tax Cash-on-Cash Return (ROI) % % % % % % % % % % Reserves Balance 32,181 35,809 39,569 43,465 47,501 51,681 56,010 60,490 65,128 69,927 Total Cash Position (inc Reserves) * 517, , , , ,303 1,040,764 1,155,808 1,274,509 1,396,940 2,432,101 Total Equity Position (Inc Reserves) 666, , , , , , , ,988 1,027,709 1,080,259 Return on Equity (ROE) * 13.67% 13.33% 13.02% 12.72% 12.45% 12.18% 11.93% 11.69% 11.46% 11.24% *pre-tax Cash-on-Cash vs. ROE Cumulative Cash/Cash Return (After-Tax) 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% Cash-on-Cash Return (pre-tax) Return on Equity (pretax) % % % % % % % Point where line passes 100% equals full return of investment 5.00% % 0.00% 0.00%

9 DISCOUNTED CASH FLOW ANALYSIS AND VALUATION Year (End) /1/2010 6/1/2011 6/1/2012 6/1/2013 6/1/2014 6/1/2015 6/1/2016 6/1/2017 6/1/2018 6/1/2019 6/1/2020 6/1/2021 6/1/2022 Cumulative Cash Outlay (358,000.00) -358, , , , , , , , , , , ,000 Gross Operating Income 226, , , , , , , , , , , ,997 Gross Operating Expenses 99, , , , , , , , , , , ,318 Net Operating Income 127, , , , , , , , , , , ,679 Mortgage Payments 64,479 64,479 64,479 64,479 64,479 64,479 64,479 64,479 64,479 64,479 64,479 64,479 Pre-tax Cashflow 63,141 65,693 68,297 70,952 73,661 76,424 79,242 82,116 85,048 88,039 91,089 94,200 Pre-Tax Cash-on-Cash Return 17.64% 18.35% 19.08% 19.82% 20.58% 21.35% 22.13% 22.94% 23.76% 24.59% 25.44% 26.31% Income Taxes (Credits) 15,310 15,949 16,965 18,006 19,075 20,171 21,297 22,453 23,640 24,860 26,114 27,402 After-tax Cashflow 47,831 49,744 51,332 52,946 54,586 56,252 57,945 59,663 61,408 63,179 64,976 66,798 After-Tax Cash-on-Cash Return 13.36% 13.90% 14.34% 14.79% 15.25% 15.71% 16.19% 16.67% 17.15% 17.65% 18.15% 18.66% Sale Price 1,160,182 1,183,385 1,207,053 1,231,194 1,255,818 1,280,934 1,306,553 1,332,684 1,359,338 1,386,525 1,414,255 1,442,540 Gross Sale Proceeds Capital Gains Taxes Reserves Release Total After-Tax Cashflow (CFAT) (358,000.00) 47,831 49,744 51,332 52,946 54,586 56,252 57,945 59,663 61,408 63,179 64,976 66,798 (1) Present Value of Property based on NOI and Projected Resale Value Cashflow Stream: $ 127,620 $ 130,172 $ 132,776 $ 135,431 $ 138,140 $ 140,903 $ 143,721 $ 146,595 $ 149,527 $ 152,518 $ 155,568 $ 158,679 Present Value of Property (PV): $ 1,494,129 Net Present Value of Property (PV minus Purchase Price ) $ 444,129 NPV of Property is Positive. Required Rate of Return will be Exceeded (2) Present Value of Cash Investment based on Pre-Tax Cash Flows Cashflow Stream: -358,000 $ 63,141 $ 65,693 $ 68,297 $ 70,952 $ 73,661 $ 76,424 $ 79,242 $ 82,116 $ 85,048 $ 88,039 $ 91,089 $ 94,200 Present Value of Investment (PV): $839,451 Net Present Value of Investment (PV minus Investment) $481,451 NPV of Investment is Positive. Required Rate of Return will be Exceeded Pre-Tax Leveraged IRR 21.64% Pre-Tax Leveraged MIRR 14.79% (3) Present Value of Cash Investment based on After-Tax Cash Flows Cashflow Stream: -358,000 $ 47,831 $ 49,744 $ 51,332 $ 52,946 $ 54,586 $ 56,252 $ 57,945 $ 59,663 $ 61,408 $ 63,179 $ 64,976 $ 66,798 Present Value of Investment (PV): $611,241 Net Present Value of Investment (PV minus Investment) $253,241 NPV of Investment is Positive. Required Rate of Return will be Exceeded After-Tax Leveraged IRR 16.62% After-Tax Leveraged MIRR 12.98% ASSUMPTIONS Purchase Price $1,050, Initial Capital Improvements $100, Additional Upfront Fee to Buyer (Optiona $0.00 Total Cash Invested $358, Holding Term 20 Years Discount Rate for DCF Valuation 10.00% Type of Resale Calculation Set Cap Rate Resale Cap Rate Assumed 11.00% Annual Rent Growth (1st-Year) 2.00% Annual Operating Expenses Growth (1st Y 2.00%

10 DEBT COVERAGE AND LTV PROJECTIONS Year (End) /1/2010 6/1/2011 6/1/2012 6/1/2013 6/1/2014 6/1/2015 6/1/2016 6/1/2017 6/1/2018 6/1/2019 6/1/2020 Gross Operating Income 226, , , , , , , , , ,047 Gross Operating Expenses 99, , , , , , , , , ,529 Net Operating Income 127, , , , , , , , , ,518 Debt Service 64,479 64,479 64,479 64,479 64,479 64,479 64,479 64,479 64,479 64,479 DCR (Debt Coverage Ratio) Projected Property Value 1,160,182 1,183,385 1,207,053 1,231,194 1,255,818 1,280,934 1,306,553 1,332,684 1,359,338 1,386,525 Total Debt 840, , , , , , , , , , ,662 Total Equity 210, , , , , , , , , , ,863 LTV (Loan to Value) 80.00% 72.08% 70.33% 68.60% 66.88% 65.18% 63.48% 61.80% 60.13% 58.47% 56.81% Debt Yield 15.19% 15.26% 15.64% 16.03% 16.45% 16.88% 17.33% 17.80% 18.29% 18.81% 19.36% Gross Operating Income 276, , , , , , , , , ,405 Gross Operating Expenses 120, , , , , , , , , ,487 Net Operating Income 155, , , , , , , , , ,918 Debt Service 64,479 64,479 64,479 64,479 64,479 64,479 64,479 64,479 64,479 64,479 DCR (Debt Coverage Ratio) Projected Property Value 1,414,255 1,442,540 1,471,391 1,500,819 1,530,835 1,561,452 1,592,681 1,624,535 1,657,025 1,690,166 Total Debt 780, , , , , , , , , ,834 Total Equity 634, , , , , , , , ,581 1,010,332 LTV (Loan to Value) 55.16% 53.51% 51.86% 50.21% 48.56% 46.91% 45.25% 43.58% 41.91% 40.22% Debt Yield 19.94% 20.56% 21.21% 21.91% 22.65% 23.45% 24.31% 25.24% 26.25% 27.35% ASSUMPTIONS MORTGAGE ASSUMPTIONS: (Mortgage 1) Purchase Price $1,050, Amount Borrowed 840,000 Initial Capital Improvements $100, Initial LTV% 80% Initial Reserves Deposited $0.00 Type of Mortgage Fixed Holding Term 20 Years Term 40 Type of Property Value Calculation Set Cap Rate* Interest Rate 7.25% Resale Cap Rate Assumed 11.00% Payment Amount (Monthly) Annual Rent Growth (Effective) 2.00% Annual Operating Expenses Growth 2.00% Buy-in Cap Rate 11.10% Buy-in GRM 4.56 * Market (Resale) Value Calculation Explanation: Buy-in $/Sq Ft There are 2 ways a market value of a property may be projected with this analysis: Buy-in DCR ) "Set Cap Rate" - Market Value is calculated given a user-specified Capitalization Rate (otherwise known as a "Terminal Cap Rate") Buy-in Debt Yield 15.19% 2) "Annual App %" - Market Value is calculated given a user-specified annual appreciation rate Buy-in Cash/Cash (Pre-Tax) 17.64% Debt vs. Equity Debt Coverage Ratio (DCR) 1,200,000 1,000, , , , ,000 - Total Debt Total Equity D C R % 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% D E B T Y I E L D Debt Yield DCR

11 REFINANCING ANALYSIS New Loan Assumptions 1st Mortgage 2nd Mortgage * Use the inputs below to project a future appraisal in order to determine in which year you'll be able to pull out your investment Used? Yes No Method for Forecasting Market Value: Set Cap Rate Loan Type Fixed Interest Only Terminal Cap Rate for Appraisal 8.50% Term (In years) LTV % 80.0% 15.0% Rate 7.25% 10.0% Year (End) /1/2011 6/1/2012 6/1/2013 6/1/2014 6/1/2015 6/1/2016 6/1/2017 6/1/2018 6/1/2019 6/1/2020 6/1/2021 6/1/2022 Existing Mortgage Balance 1 836, , , , , , , , , , , ,844 Existing Mortgage Balance Net Operating Income (NOI) 127, , , , , , , , , , , ,679 Projected Appraisal of Property 1,501,412 1,531,440 1,562,069 1,593,310 1,625,176 1,657,680 1,690,834 1,724,650 1,759,143 1,794,326 1,830,213 1,866,817 New Loan Amount 80% 1,201,129 1,225,152 1,249,655 1,274,648 1,300,141 1,326,144 1,352,667 1,379,720 1,407,315 1,435,461 1,464,170 1,493,453 Closing costs (% of new loan) 4% 48,045 49,006 49,986 50,986 52,006 53,046 54,107 55,189 56,293 57,418 58,567 59,738 Cash Pulled out at Refi 316, , , , , , , , , , , ,872 Cash tied up in Property prior to Refi (358,000) (358,000) (358,000) (358,000) (358,000) (358,000) (358,000) (358,000) (358,000) (358,000) (358,000) (358,000) Net Cash Pulled out at Refi (41,215) (14,176) 13,623 42,212 71, , , , , , , ,872 First year when you can pull out entire original Cash Investment IN YEAR 3 New Mortgage Payment 1 (Annual) (92,199) (94,043) (95,924) (97,843) (99,800) (101,796) (103,832) (105,908) (108,026) (110,187) (112,390.62) (114,638.43) New Mortgage Payment 2 (Annual) DCR of new loan New Monthly Cash Flow (after Refi) 2, , , , , , , , , , , , Equity Left (after Refi) 300, , , , , , , , , , , ,363.36

12 Years to Depreciate Property: Land's % of Value Income Tax Bracket % Capital Gains % TAX TREATMENT AND SHELTER REPORT % 35.00% 20.00% Designation for Handling Passive Losses: Passive Participant Year (End) /1/2010 6/1/2011 6/1/2012 6/1/2013 6/1/2014 6/1/2015 6/1/2016 6/1/2017 6/1/2018 6/1/2019 6/1/2020 Net Operating Income (NOI) (A) 127, , , , , , , , , ,518 Mortgage Interest Paid (B) 60,779 60,501 60,203 59,883 59,538 59,168 58,770 58,342 57,882 57,387 Mortgage Principal Paid (C ) 3,700 3,978 4,276 4,596 4,941 5,311 5,709 6,137 6,597 7,092 Pre-Tax Cashflow A-B-C 63,141 65,693 68,297 70,952 73,661 76,424 79,242 82,116 85,048 88,039 Depreciable Basis (Original) 940, , , , , , , , , , ,979 Depreciable Basis (Cap Improvements) Depreciation (Original) 23,098 24,103 24,103 24,103 24,103 24,103 24,103 24,103 24,103 24,103 Depreciation (Cap Improvements) Cumulative Depreciation (D) 23,098 47,201 71,303 95, , , , , , ,021 Taxable Income (before Write-Offs) A-B-D 43,743 45,569 48,470 51,446 54,499 57,633 60,849 64,151 67,543 71,028 Amount written off against Income this year Losses Carried Over Cumulative Losses Carried Over Losses Previously Carried Over used to Offset This Year's Income Taxable Income (Loss) (After Write-offs) 43,743 45,569 48,470 51,446 54,499 57,633 60,849 64,151 67,543 71,028 Income Taxes (Credits) (E) 15,310 15,949 16,965 18,006 19,075 20,171 21,297 22,453 23,640 24,860 Projected Sale Price Adjusted Basis 1,150,000 ####### 1,102,799 1,078,697 ####### ####### ####### 982, , , ,979 Projected Cost of Sale Projected Gain on Sale (before write-offs) Accumulated Passive Losses Projected Gain on Sale (after write-offs) Capital Gains Taxes Maximum Annual Write-off vs. Non-Passive Income - Total Taxes (Credits) 15,310 15,949 16,965 18,006 19,075 20,171 21,297 22,453 23,640 24,860 Cashflow After Taxes A-B-C-E 47,831 49,744 51,332 52,946 54,586 56,252 57,945 59,663 61,408 63,179 Remaining Accumulated Losses to be carried over to other properties Net Operating Income (NOI) (A) 155, , , , , , , , , ,918 Mortgage Interest Paid (B) 56,855 56,284 55,670 55,009 54,300 53,537 52,716 51,835 50,887 49,868 Mortgage Principal Paid (C ) 7,623 8,195 8,809 9,469 10,179 10,942 11,763 12,644 13,592 14,611 Pre-Tax Cashflow A-B-C 91,089 94,200 97, , , , , , , ,439 Depreciable Basis (Original) 675, , , , , , , , , ,953 Depreciable Basis (Cap Improvements) Depreciation (Original) 24,103 24,103 24,103 24,103 24,103 24,103 24,103 24,103 24,103 24,103 Depreciation (Cap Improvements) Cumulative Depreciation (D) 240, , , , , , , , , ,021 Taxable Income (before Write-Offs) A-B-D 74,610 78,293 82,081 85,978 89,990 94,121 98, , , ,948 Amount written off against Income this year Losses Carried Over Cumulative Losses Carried Over Losses Previously Carried Over used to Offset This Year's Income Taxable Income (Loss) (After Write-offs) 74,610 78,293 82,081 85,978 89,990 94,121 98, , , ,948 Income Taxes (Credits) (E) 26,114 27,402 28,728 30,092 31,496 32,942 34,432 35,967 37,549 39,182 Projected Sale Price 1,690,166 Adjusted Basis 885, , , , , , , , , ,953 Projected Cost of Sale 101,410 Projected Gain on Sale (before write-offs) 919,803 Accumulated Passive Losses - Projected Gain on Sale (after write-offs) 919,803 Capital Gains Taxes 183,961 Total Taxes (Credits) 26,114 27,402 28,728 30,092 31,496 32,942 34,432 35,967 37, ,142 Cashflow After Taxes A-B-C-E 64,976 66,798 68,646 70,519 72,417 74,339 76,284 78,253 80, ,219 Remaining Accumulated Losses to be carried over to other properties -

13 $ 1,050, $ 100, Proceeds of Sale in Year 20 Sales Price 1st Mortgage Payoff 1,690, (679,833.93) $ 1,050, nd Mortgage Payoff - 20 years Cost of Sale (101,409.95) Set Cap Rate Pre-Tax Cash 908, % Capital Gains (183,960.58) $ 1,690, After-Tax Cash 724, Year (End) /1/2010 6/1/2011 6/1/2012 6/1/2013 6/1/2014 6/1/2015 6/1/2016 6/1/2017 6/1/2018 6/1/2019 6/1/2020 Calculation of Market Value Capital Improvements FMV Multiplier Net Operating Income (NOI) 127, , , , , , , , , ,518 Market Value 1,050,000 1,160,182 1,183,385 1,207,053 1,231,194 1,255,818 1,280,934 1,306,553 1,332,684 1,359,338 1,386,525 Calculation of Proceeds of Sale 1st Mortgage Balance 836, , , , , , , , , ,662 2nd Mortgage Balance Total Debt 840, , , , , , , , , , ,662 Cost of Sale Cash at Sale Purchase Price Initial Capital Improvements Assumed Value of Property in year 0 Holding Period Type of Market Value/Resale Value Calculation Resale/Terminal Cap Rate Sale Price/Terminal Value Calculation of Capital Gains Taxes Adjusted Basis 1,126,902 1,102,799 1,078,697 1,054,594 1,030,491 1,006, , , , ,979 Accumulated Passive Losses Gain on Sale (after write-offs) Capital Gains Taxes After-tax Cash Proceeds of Sale PROPERTY VALUE AND DISPOSITION REPORT Breakdown of Total Equity: Original DownPayment 210, , , , , , , , , , ,000 Reserves 0 2,400 4,896 7,491 10,188 12,989 15,899 18,920 22,055 25,308 28,682 Principal Paydown on Debt 3,700 7,678 11,954 16,550 21,491 26,802 32,511 38,649 45,246 52,338 Appreciation 110, , , , , , , , , ,525 Total Equity with Reserves 210, , , , , , , , , , ,545 Calculation of Market Value Capital Improvements FMV Multiplier Net Operating Income (NOI) 155, , , , , , , , , ,918 Market Value 1,414,255 1,442,540 1,471,391 1,500,819 1,530,835 1,561,452 1,592,681 1,624,535 1,657,025 1,690,166 Calculation of Proceeds of Sale 1st Mortgage Balance 780, , , , , , , , , ,834 2nd Mortgage Balance Total Debt 780, , , , , , , , , ,834 Cost of Sale 101,410 Cash at Sale 908,922 Calculation of Capital Gains Taxes Adjusted Basis 885, , , , , , , , , ,953 Accumulated Passive Losses 0 Gain on Sale (after write-offs) 919,803 Capital Gains Taxes 183,961 After-tax Cash Proceeds of Sale 724,961 Breakdown of Total Equity: Original DownPayment 210, , , , , , , , , ,000 Reserves 32,181 35,809 39,569 43,465 47,501 51,681 56,010 60,490 65,128 69,927 Principal Paydown on Debt 59,961 68,156 76,965 86,435 96, , , , , ,166 Appreciation 364, , , , , , , , , ,166 Total Equity with Reserves 666, , , , , , , ,988 1,027,709 1,080,259 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 - Market Value vs. Total Debt Market Value Total Debt 1,200,000 1,000, , , , ,000 - Components of Total Equity Over Time Appreciation Debt Principal Reduction Reserves Original Downpayment Capital Gains -7% After-Tax Cash 28% Proceeds of Sale Pre-Tax Cash 35% 1st Mortgage Payoff -26% 2nd Mortgage Payoff 0% Cost of Sale -4%

14 FINANCIAL RATIOS Year (End) /1/2010 6/1/2011 6/1/2012 6/1/2013 6/1/2014 6/1/2015 6/1/2016 6/1/2017 6/1/2018 6/1/2019 6/1/2020 Pre-Tax Cash on Cash Return 17.64% 18.35% 19.08% 19.82% 20.58% 21.35% 22.13% 22.94% 23.76% 24.59% After-Tax Cash on Cash Return 13.36% 13.90% 14.34% 14.79% 15.25% 15.71% 16.19% 16.67% 17.15% 17.65% Cumulative Cash-on-Cash Return (ROI) Pre-Tax 17.64% 35.99% 55.06% 74.88% 95.46% % % % % % Cumulative Cash-on-Cash Return (ROI) After-Tax 13.36% 27.26% 41.59% 56.38% 71.63% 87.34% % % % % LTV (Loan to Value) 80.00% 72.08% 70.33% 68.60% 66.88% 65.18% 63.48% 61.80% 60.13% 58.47% 56.81% DCR (Debt Coverage Ratio) Debt Yield 15.19% 15.26% 15.64% 16.03% 16.45% 16.88% 17.33% 17.80% 18.29% 18.81% 19.36% Break-Even Ratio 72.16% 71.60% 71.06% 70.52% 69.99% 69.48% 68.98% 68.48% 67.99% 67.52% Return on Equity (CFAT/Total Equity) (Pre-Tax) 19.35% 18.46% 17.67% 16.98% 16.36% 15.80% 15.30% 14.84% 14.42% 14.03% Return on Equity (CFAT/Total Equity) (After-Tax) 14.66% 13.97% 13.28% 12.67% 12.12% 11.63% 11.19% 10.78% 10.41% 10.07% Cap Rate based on original cost and current NOI 11.10% 11.32% 11.55% 11.78% 12.01% 12.25% 12.50% 12.75% 13.00% 13.26% Pre-Tax Cash on Cash Return 25.44% 26.31% 27.20% 28.10% 29.03% 29.97% 30.93% 31.90% 32.90% 33.92% After-Tax Cash on Cash Return 18.15% 18.66% 19.17% 19.70% 20.23% 20.76% 21.31% 21.86% 22.41% 22.98% Cumulative Cash-on-Cash Return (ROI) Pre-Tax % % % % % % % % % % Cumulative Cash-on-Cash Return (ROI) After-Tax % % % % % % % % % % LTV (Loan to Value) 55.16% 53.51% 51.86% 50.21% 48.56% 46.91% 45.25% 43.58% 41.91% 40.22% DCR (Debt Coverage Ratio) Debt Yield 19.94% 20.56% 21.21% 21.91% 22.65% 23.45% 24.31% 25.24% 26.25% 27.35% Break-Even Ratio 67.05% 66.60% 66.15% 65.71% 65.28% 64.85% 64.44% 64.03% 63.64% 63.25% Return on Equity (CFAT/Total Equity) (Pre-Tax) 13.67% 13.33% 13.02% 12.72% 12.45% 12.18% 11.93% 11.69% 11.46% 11.24% Return on Equity (CFAT/Total Equity) (After-Tax) 9.75% 9.45% 9.18% 8.92% 8.67% 8.44% 8.22% 8.01% 7.81% 7.61% Cap Rate based on original cost and current NOI 13.53% 13.80% 14.07% 14.36% 14.64% 14.94% 15.23% 15.54% 15.85% 16.17% Year (End) Pre-Tax Cash on Cash Return After-Tax Cash on Cash Return Cumulative Cash-on-Cash Return (ROI) Pre-Tax Cumulative Cash-on-Cash Return (ROI) After-Tax LTV (Loan to Value) DCR (Debt Coverage Ratio) Debt Yield Break-Even Ratio Return on Equity (CFAT/Total Equity) (Pre-Tax) Return on Equity (CFAT/Total Equity) (After-Tax) Cap Rate based on original cost and current NOI Year (End) Pre-Tax Cash on Cash Return After-Tax Cash on Cash Return Cumulative Cash-on-Cash Return (ROI) Pre-Tax Cumulative Cash-on-Cash Return (ROI) After-Tax LTV (Loan to Value) DCR (Debt Coverage Ratio) Debt Yield Break-Even Ratio Return on Equity (CFAT/Total Equity) (Pre-Tax) Return on Equity (CFAT/Total Equity) (After-Tax) Cap Rate based on original cost and current NOI