Sample property valuation
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This document analyzes the potential real estate investment of purchasing a multi-tenant commercial property located at 37-39 Main Street in Andover, MA for $1,600,000. The analysis includes details on the property, purchase terms, lease details, operating expenses, comparable property sales, and projected cash flows, equity growth, and returns over a 5 year period. The analysis indicates an after-tax internal rate of return of over 30% and growing property equity from loan paydown and appreciation.
Sample property valuation
- 1. P r e p a r e d F o r : P r e p a r e d B y : 37-39 Main Street 37-39 Main Street Andover, MA 01845 Jeremy Cyrier, CCIM President 617-674-2043 [email protected] 9048314 Phone: 617-674-2043 ● 591 North Avenue Building 3 ● Wakefield, MA 01880 ● www.mansardcre.com Owner of Record Recommended Asking Price $1,600,000
- 2. Table of Contents Real Estate Investment Details ..................................................................................... 3 Property Photos ............................................................................................................. 4 Lease Rent Roll .............................................................................................................. 4 Internal Rate of Return Analysis .................................................................................. 5 Annual Property Operating Data .................................................................................. 6 Financial Indicators ...................................................................................................... 7 Recent Sales Comparables ............................................................................................ 8 Property Equity Analysis ............................................................................................ 12 Cumulative Wealth Analysis .......................................................................................... 13
- 3. Real Estate Investment Details ANALYSIS Analysis Date: September 2013 PROPERTY Property: 37-39 Main Street Property Address: 37-39 Main Street Andover, MA 01845 Year Built: 1930 FINANCIAL INFORMATION Down Payment: $0 Closing Costs: $8,000 Discount Rate: 12.00% PURCHASE INFORMATION Property Type: Commercial Purchase Price: $1,600,000 Tenants: 7 Total Rentable Sq. Ft.: 5,094 Resale Valuation 8.5% (capitalization of noi) Resale Expenses: 4.0% LOANS Debt Term Amortization Rate Payment LO Costs Fixed $1,200,000 25 years 25 years 4.5% $6,670 $12,000 INCOME & EXPENSES Gross Operating Income: $175,154 Monthly GOI: $14,596 Total Annual Expenses: ($27,535) Monthly Expenses: ($2,295) CONTACT INFORMATION Jeremy Cyrier, CCIM 617-674-2043 [email protected] 9048314 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 13
- 4. Lease Rent Roll37-39 Main Street 37-39 Main Street Andover, MA 01845 Jeremy Cyrier, CCIM 617-674-2043 Suite Tenant Start Date Expire Date RSF $/RSF Annualized Rent Tenant Improvements Commissions Renewal Term Renewal Increase Notes 1 Fitness Concept 01/01/2006 12/31/2026 1,550 $29.48 $45,696 $0.00 $0.00 1 year $0.00 2 Optical 01/01/2007 12/31/2017 850 $29.08 $24,720 $0.00 $0.00 1 year $0.00 Lease period and escalations to be verified. 3 Rear Store 07/01/2012 12/31/2013 1,000 $24.00 $24,000 $0.00 $0.00 1 year $0.00 Lease period and escalations to be verified. 4 3 Bedroom Apartment 07/01/2012 06/30/2013 1,050 $22.86 $24,000 $0.00 $0.00 1 year $0.00 5 3 Bedroom Apartment 07/01/2012 06/30/2013 1,050 $24.57 $25,800 $0.00 $0.00 1 year $0.00 6 3 Bedroom Apartment 07/01/2012 06/30/2013 1,050 $25.14 $26,400 $0.00 $0.00 1 year $0.00 7 3 Bedroom Apartment 07/01/2012 06/30/2013 1,050 $22.86 $24,000 $0.00 $0.00 1 year $0.00 page 4 of 13
- 5. Internal Rate of Return Analysis37-39 Main Street 37-39 Main Street Andover, MA 01845 Jeremy Cyrier, CCIM 617-674-2043 BEFORE TAX IRR Time Future Cash Flows Initial Investment ($20,000) End of Year 1 $67,579 End of Year 2 $67,579 End of Year 3 $67,579 End of Year 4 $67,579 End of Year 5* $680,510 IRR = NA * ($67,579 + $612,931) AFTER TAX IRR Time Future Cash Flows Initial Investment ($20,000) End of Year 1 $67,579 End of Year 2 $67,579 End of Year 3 $67,579 End of Year 4 $67,579 End of Year 5* $634,089 IRR = NA * ($67,579 + $566,510) page 5 of 13
- 6. Annual Property Operating Data37-39 Main Street 37-39 Main Street Andover, MA 01845 Jeremy Cyrier, CCIM 617-674-2043 Description Year 1 Year 2 Year 3 Year 4 Year 5 Rental Income $194,616 $194,616 $194,616 $194,616 $194,616 GROSS SCHEDULED INCOME $194,616 $194,616 $194,616 $194,616 $194,616 General Vacancy ($19,462) ($19,462) ($19,462) ($19,462) ($19,462) GROSS OPERATING INCOME $175,154 $175,154 $175,154 $175,154 $175,154 Expenses Building Insurance ($2,467) ($2,467) ($2,467) ($2,467) ($2,467) Janitorial ($616) ($616) ($616) ($616) ($616) Legal ($1,123) ($1,123) ($1,123) ($1,123) ($1,123) Repairs ($5,839) ($5,839) ($5,839) ($5,839) ($5,839) Taxes - Real Estate ($11,542) ($11,542) ($11,542) ($11,542) ($11,542) Utilities ($5,948) ($5,948) ($5,948) ($5,948) ($5,948) TOTAL OPERATING EXPENSES ($27,535) ($27,535) ($27,535) ($27,535) ($27,535) NET OPERATING INCOME $147,619 $147,619 $147,619 $147,619 $147,619 page 6 of 13
- 7. Financial Indicators37-39 Main Street 37-39 Main Street Andover, MA 01845 Jeremy Cyrier, CCIM 617-674-2043 Description Year 1 Year 2 Year 3 Year 4 Year 5 Gross Rent Multiplier 8.92 8.92 8.92 8.92 8.92 Capitalization Rate 9.23% 9.23% 9.23% 9.23% 9.23% Cash On Cash Return b/t 337.90% 337.90% 337.90% 337.90% 337.90% Cash On Cash Return a/t 337.90% 337.90% 337.90% 337.90% 337.90% Debt Coverage Ratio 1.84 1.84 1.84 1.84 1.84 Gross Income per Sq. Ft. $38.20 $38.20 $38.20 $38.20 $38.20 Expenses per Sq. Ft. ($5.41) ($5.41) ($5.41) ($5.41) ($5.41) Net Income Multiplier 11.76 11.76 11.76 11.76 11.76 Operating Expense Ratio 15.72% 15.72% 15.72% 15.72% 15.72% Loan To Value Ratio 67.57% 65.97% 64.29% 62.54% 60.71% Footnotes: b/t = before taxes; a/t = after taxes page 7 of 13
- 8. Recent Sales Comparables37-39 Main Street 37-39 Main Street Andover, MA 01845 Jeremy Cyrier, CCIM 617-674-2043 Subject 2% 4% 6% 8% 10% 12% 14% 16% Cap Rate Subject 1 2 3 4 5 6 7 $40 $80 $120 $160 $200 $240 $280 $320 Avg. $132.31 Price per Sq. Ft. page 8 of 13
- 9. Recent Sales Comparables37-39 Main Street 37-39 Main Street Andover, MA 01845 Jeremy Cyrier, CCIM 617-674-2043 S 37-39 Main Street 37-39 Main Street Andover, MA 01845 Sale Price $1,600,000 Tenants 7 Price/Tenant $228,571 Price/SqFt $314.10 Cap Rate 9.23% Year Built 1930 1 14 Brook Street 14 BROOK ST ANDOVER, MA 01810 Sale Price $400,000 Tenants 3 Price/Tenant $133,333 Price/SqFt $160.51 Cap Rate N/A Year Built 1900Sale Date 10/11/2011 2 222-224 Marblehead Street 222-224 MARBLEHEAD ST NORTH ANDOVER, MA 1845 Sale Price $425,000 Tenants 0 Price/Tenant N/A Price/SqFt $126.49 Cap Rate N/A Year Built 1900Sale Date 11/30/2010 page 9 of 13
- 10. Recent Sales Comparables37-39 Main Street 37-39 Main Street Andover, MA 01845 Jeremy Cyrier, CCIM 617-674-2043 3 39 Harold Street 39 HAROLD ST NORTH ANDOVER, MA 01845 Sale Price $389,250 Tenants 3 Price/Tenant $129,750 Price/SqFt $125.04 Cap Rate N/A Year Built 1900Sale Date 5/28/2010 4 44 Main Street 44 MAIN ST NORTH ANDOVER, MA 01845 Sale Price $475,000 Tenants 0 Price/Tenant N/A Price/SqFt $202.65 Cap Rate N/A Year Built 1900Sale Date 6/8/2011 5 null 585 CHICKERING RD NORTH ANDOVER, MA 1845 Sale Price $515,000 Tenants Price/Tenant N/A Price/SqFt $123.83 Cap Rate N/A Year Built N/ASale Date 4/14/2011 page 10 of 13
- 11. Recent Sales Comparables37-39 Main Street 37-39 Main Street Andover, MA 01845 Jeremy Cyrier, CCIM 617-674-2043 6 565 Chickering Road 565 CHICKERING RD NORTH ANDOVER, MA 01845 Sale Price $461,636 Tenants 0 Price/Tenant N/A Price/SqFt $78.87 Cap Rate N/A Year Built N/ASale Date 3/6/2012 7 2 Dufton Road 2 DUFTON RD ANDOVER, OH 01810 Sale Price $339,368 Tenants 3 Price/Tenant $113,123 Price/SqFt $108.77 Cap Rate N/A Year Built 1900Sale Date 1/7/2010 page 11 of 13
- 12. Property Equity Analysis37-39 Main Street 37-39 Main Street Andover, MA 01845 Jeremy Cyrier, CCIM 617-674-2043 Year 1 2 3 4 5 $29,000 $58,000 $87,000 $116,000 $145,000 $174,000 $203,000 $232,000 $261,000 $290,000 Legend Initial Equity Equity (loan reduction) Equity (appreciation) page 12 of 13
- 13. Cumulative Wealth Analysis37-39 Main Street 37-39 Main Street Andover, MA 01845 Jeremy Cyrier, CCIM 617-674-2043 Year 1 2 3 4 5 $63,000 $126,000 $189,000 $252,000 $315,000 $378,000 $441,000 $504,000 $567,000 $630,000 Legend Equity (loan reduction) Equity (appreciation) CASH FLOW (a/t) page 13 of 13