For more information contact: Partner rhartsell@oxfordcres.com Phone: (713) 647-6400 2900 Weslayan St., Suite 480 Houston, TX 77027 www.oxfordcres.com
Table of Contents Real Estate Investment Details... 3 Executive Summary... 4 Cash Flow Analysis... 5 Resale Report... 6 Property Resale Analysis... 7 Loan Analysis... 8 Property Equity Analysis... 9 Equity vs. Debt... 10 Cumulative Wealth Analysis... 11
Real Estate Investment Details ANALYSIS Analysis Date May 2014 PROPERTY Property Property Address Year Built 1975 MG Architects PURCHASE INFORMATION Property Type Office Purchase Price $750,000 Fair Market Value $750,000 Tenants 1 Total Rentable Sq. Ft. 5,115 Resale Valuation 3.0% (annual appreciation) Resale Expenses 8.0% FINANCIAL INFORMATION Down Payment $75,000 Closing Costs $19,000 LT Capital Gain 15.00% Discount Rate 6.50% LOANS Debt Term Amortization Rate Payment LO Costs Fixed $675,000 25 years 25 years 4.75% $3,848 INCOME & EXPENSES Gross Operating Income $0 Monthly GOI $0 Total Annual Expenses ($27,720) Monthly Expenses ($2,310) CONTACT INFORMATION rhartsell@oxfordcres.com The calculations and data presented are deemed to be accurate, but not guaranteed. They are intended for the purpose of illustrative projections and analysis. The information provided is not intended to replace or serve as substitute for any legal, accounting, investment, real estate, tax or other professional advice, consultation or service. The user of this software should consult with a professional in the respective legal, accounting, tax or other professional area before making any decisions. page 3 of 11
Executive Summary ACQUISITION COSTS Purchase Price, Points and Closing Costs $769,000 Investment - Cash $94,000 First Loan $675,000 INVESTMENT INFORMATION Purchase Price $750,000 Price per Tenant $750,000 Price per Sq. Ft. $146.63 INCOME, EXPENSES & CASH FLOW Gross Scheduled Income $0 Total Vacancy and Credits $0 Operating Expenses ($27,720) Net Operating Income ($27,720) Debt Service ($46,180) Cash Flow Before Taxes ($73,899) FINANCIAL INDICATORS Cash on Cash Return Before Taxes -78.62% Internal Rate of Return N/A Debt Coverage Ratio -0.60 Capitalization Rate -3.70% Gross Income / Square Feet $0.00 Gross Expenses / Square Feet ($5.42) Operating Expense Ratio N/A page 4 of 11
Cash Flow Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 GROSS SCHEDULED INCOME $0 $0 $0 $0 $0 Total Operating Expenses ($27,720) ($28,274) ($28,839) ($29,416) ($30,005) NET OPERATING INCOME ($27,720) ($28,274) ($28,839) ($29,416) ($30,005) Loan Payment ($46,180) ($46,180) ($46,180) ($46,180) ($46,180) NET CASH FLOW (b/t) ($73,899) ($74,453) ($75,019) ($75,596) ($76,184) Cash On Cash Return b/t -78.62% -79.21% -79.81% -80.42% -81.05% Footnotes: b/t = before taxes;a/t = after taxes page 5 of 11
Resale Report NET PROCEEDS FROM SALE Adjusted Basis Basis At Acquisition $769,000 -Depreciation $96,960 Adjusted Basis at Sale $672,040 Capital Gain Sale Price $869,456 -Sale Expenses ($69,556) -Adjusted Basis at Sale $672,040 Gain or (Loss) $127,860 -Depreciation (limited to gain) $96,960 Capital Gain from Appreciation $30,899 Sales Proceeds After Tax Sale Price $869,456 -Sale Expenses $69,556 -Mortgage Balance $595,505 Sale Proceeds Before Tax $204,394 -Tax On Depreciation $24,240 -Tax On Capital Gain $4,635 Sale Proceeds After Tax $175,519 page 6 of 11
Property Resale Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 Projected Property Value $772,500 $795,675 $819,545 $844,132 $869,456 Resale Expenses ($61,800) ($63,654) ($65,564) ($67,531) ($69,556) Proceeds b/f Debt Payoff $710,700 $732,021 $753,982 $776,601 $799,899 Basis at Acquisition $769,000 $769,000 $769,000 $769,000 $769,000 Depreciation ($18,894) ($38,611) ($58,329) ($78,046) ($96,960) Adjusted Tax Basis $750,106 $730,389 $710,671 $690,954 $672,040 Resale Tax Gain (Loss) ($39,406) $1,632 $43,310 $85,647 $127,860 Resale Tax Benefit (Cost) $0 ($408) ($10,828) ($20,652) ($28,875) Loan Principal Balance ($660,572) ($645,443) ($629,579) ($612,946) ($595,505) Net Resale Proceeds $50,128 $86,170 $113,575 $143,004 $175,519 Footnotes: b/f = before page 7 of 11
Loan Analysis Description Year 1 Year 2 Year 3 Year 4 Year 5 LOAN 1 Debt Service Analysis Principal Payments $14,428 $15,129 $15,863 $16,634 $17,441 Interest Payments $31,751 $31,051 $30,316 $29,546 $28,738 Total Debt Service $46,180 $46,180 $46,180 $46,180 $46,180 Principal Balance Analysis Beginning Principal Balance $675,000 $660,572 $645,443 $629,579 $612,946 Principal Reductions $14,428 $15,129 $15,863 $16,634 $17,441 Ending Principal Balance $660,572 $645,443 $629,579 $612,946 $595,505 page 8 of 11
Property Equity Analysis $280,000 $252,000 $224,000 $196,000 $168,000 $140,000 $112,000 $84,000 $56,000 $28,000 Year 1 2 3 4 5 Legend Initial Equity Equity (loan reduction) Equity (appreciation) page 9 of 11
Equity vs. Debt $670,000 $603,000 $536,000 $469,000 $402,000 $335,000 $268,000 $201,000 $134,000 $67,000 Year 1 2 3 4 5 Legend Equity Loan Principal Balance page 10 of 11
Cumulative Wealth Analysis $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 Year 1 2 3 4 5 Legend Equity (loan reduction) Equity (appreciation) CASH FLOW (a/t) page 11 of 11