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Analysis Overview
The Analysis Overview pie chart below provides the allocation of income and expenses for this investment opportunity. The high level overview provides a quick assessment of the financial underpinnings for the investment.
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Key Financials
The table below helps analyze the investment opportunity via key financial indicators used to evaluate an investment property. These indicators are commonly used when evaluating an investment opportunity by individuals as well as all real estate professionals.
Capitalization Rate 8.75%
Cash-on-Cash Return 6.54%
Loan to Value 80%
Debt Coverage Ratio 1.18
Operating Expense Ratio 26.32%
Net Income Multiplier 11.66
Annual Cash Flow
The Annual Cash Flow below is a fundamental analysis used to evaluate an investment opportunity. It depicts what amount is left over after all the income and expenses have been accounted for. A positive amount represents a gain to the investor. A negative amount is a loss and the investor will be required to put more cash into the investment.
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DescriptionYear 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10
Gross Scheduled Income$95,000$97,850$100,786$103,809$106,923$110,131$113,435$116,838$120,343$123,953
Total Operating Expenses($25,000)($25,750)($26,523)($27,318)($28,138)($28,982)($29,851)($30,747)($31,669)($32,619)
Net Operating Income$70,000$72,100$74,263$76,491$78,786$81,149$83,584$86,091$88,674$91,334
Loan Payment($59,543)($59,543)($59,543)($59,543)($59,543)($59,543)($59,543)($59,543)($59,543)($59,543)
Before-Tax Cash Flow$10,457$12,557$14,720$16,948$19,243$21,606$24,041$26,548$29,131$31,791
Cash-On-Cash Return6.54%7.85%9.20%10.59%12.03%13.50%15.03%16.59%18.21%19.87%
Cumulative Wealth
The Cumulative Wealth chart portrays three types income streams often associated with a real estate investments. The cash flow which comes after all income and expenses are accounted for, the loan reduction due to paying the mortgage and the appreciation in value of the investment property.
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Equity vs. Debt
The chart below depicts the annual increase in equity and the annual decrease in debt for the investor. This occurs when mortgage payments are made and a portion of the principal is paid off. By paying off the mortgage principal, the investor’s equity in the property increases and the debt is reduced.
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The calculations and data presented are deemed to be accurate, but not guaranteed. They assume an annual appreciation rate of 2% and an annual increase in expenses and income of 3%. 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.
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