kmt sample 7.16

Kevin Michael Thompson 772.341.5795 │ [email protected] │ Full Resume at: http://www.linkedin.com/pub/kevin-thompson/18/565/18/en

Sample Underwriting Proforma Template Excerpt Below is the first image excerpted from a number of tabs/sheets in an Excel underwriting template that I developed and typically use for underwriting multi-family assets. What is shown in the following images is what might be forwarded to an investment fund or lender for underwriting and analyses, and some portions of this template might also (and have been) used in a formal Investment Summary. What is shown below highlights aspects of the property location, unit counts/sizes, existing rental income, existing or prospective financing, etc., and the prospective returns for the investment.

Institutional AssetMSA:

Summary of Purchase

Per Unit Cap Rate Fin. Reference

Purchase/Offer Price: $90,774 5.70% Mar-14

Asking Price(/Unit): $94,000 5.50%

Price (@ Cap Rate): $82,726 6.25%

Year Constructed: 2013

Estimated Rehab/Unit $0 Referenced Data:

Acquisition Terms: See "Notes:" Manually Fill:

Investment

Year 1 Year 2 Year 3 Year 5 Year 7

Avg Rent Increase $55 $45 $45 $41 $45

Average Eff. Rent/Unit $900 $948 $993 $1,074 $1,162

CPI Only Eff. Rent $913 $949 $987 $1,068 $1,155

CPI Only Increase $35 $37 $38 $40 $44

Value Add/Repositioning $20 $8 $7 N/A N/A

Income/Unit $10,472 $11,045 $11,609 $12,557 $13,581

Expense/unit $5,244 $5,487 $5,719 $6,100 $6,477

NOI/Unit $5,228 $5,558 $5,890 $6,456 $7,104

Market Value/Unit $90,514 $96,510 $102,551 $112,845 $124,626

IRR -6% 12% 17% 18% 19%

COC -4% 6% 6% 5% 5%

DSC 1.21 1.29 1.37 1.38 1.29

Income CPI 4.00%

Expense CPI 3.00%

Exit cap 5.50%

Refi Int Rate 6.25%

Estimated Closing Date: 11/11/14

Class of Asset A Instutional Grade Yes

Location Rating A Green

Demographics A- Yellow

Building Quality A 6

Recent Renovations N/A 6

Barriers to Entry B 6

New Construction C

Occupancy Projections A+

Rents A

Rent Growth Good

Miscellaneous Average

Austin, TX Austin

Crime Rating

Schools

Elementary

Middle/Junior High

High School

Other Analyses/Neighborhood Data

$1,084,000

$30,500,000

$31,584,000

$27,796,080

mailto:[email protected]

http://www.linkedin.com/pub/kevin-thompson/18/565/18/en

http://www.linkedin.com/pub/kevin-thompson/18/565/18/en

Both the preceding and subsequent image are from the same tab, which provides a good general overview of the asset. What is shown is the asset unit counts/sizes, existing rental income, qualitative data about the asset and seller, and an area to include rudimentary information on assets acquired within the competitive market.

Notes:

Acq Comps: Institutional Asset

Yr Built 2013

Price/Unit $90,774

All In/Unit $95,260

Avg Unit SF 739

In Cap 5.70%

Exit Cap 5.50%

Inc/Unit $10,317

In-Place Rents/Unit Mix

Unit Size # Units Mkt Rent PSF LTL Eff Rent PSF Annual Rent

1 bedroom 1 bathroom 525 24 $851 $1.62 ($112) $739 $1.41 $245,088 7%







1 bedroom 1 bathroom 775 32 $969 $1.25 ($112) $857 $1.11 $372,096 10% 75.0%

2 bedroom 2 bathroom 995 28 $1,237 $1.24 ($112) $1,125 $1.13 $415,632 8%

2 bedroom 2 bathroom 995 28 $1,203 $1.21 ($112) $1,091 $1.10 $404,208 8%

2 bedroom 2 bathroom 995 28 $1,182 $1.19 ($112) $1,070 $1.08 $397,152 8% 25.0%

336 $989 $1.34 ($450,154) $878 $1.19 $3,989,424

739 ($37,513) $332,452

($112)

Eff Rent: $878Vacancy Jan-14 4.2% 5% $44 6% $53 7% $61 8% $70

unit types Unit Mix

248,280

Acquisition Comp #1 Acquisition Comp #2 Acquisition Comp #3 Acquisition Comp #4 Acquisition Comp #5

The unit mix lends itself to young techno-geek tenants (smaller, and A+), resulting in a good tenant profile. Nice A-Class asset, but with small units. This is both a pro and con due to the

demographics and market appeal. Selling Motive: two partners are divesting. Developer's mistakes: Vacant land nearby prepared for development, units are currently being built in the

neighborhood (nearby competitor is 40% leased, but at $1.23/SF. Velocity is +40 units month), and getting the loan product they did at that point in time. The seller is now building 80,000+ SF of

office space. Lender has been approached about supplemental (to bring debt up to 75% AT THE SAME I.R., but NOT confirmed yet). Crime: Green. Schools Avg: "6." Austin is a stronger/more growth-

oriented market than San Antonio or Dallas. Higher increases in rents during the last two years than S.A., but new product is coming on line as the price per unit is making new construction feasible.

High net worth family from Winnipeg is behind the equity, but Ledcor fund is out of Vancover. Westwood Residential was the builder. Park and ride is nearby.

The following two images are from the “Income Analysis” tab where the most significant analysis is displayed.

KEY RATIOS

A

p 0 Mar-14 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7Rent Increase $55 $45 $45 $40 $41 $43 $45

Economic Occupancy: #DIV/0! 96% 94% 94% 94% 94% 94% 94% 94%

Economic Vacancy: #DIV/0! 4% 6% 6% 6% 6% 6% 6% 6%

Average Rent/Unit $0 $858 $900 $948 $993 $1,033 $1,074 $1,117 $1,162

Loss to Lease: #DIV/0! 12.24% 9.08% 4.18% -0.37% -0.37% -0.37% -0.37% -0.37%

Bad Debt #DIV/0! 0.57% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%

Income/Unit $0.00 $10,317 $10,472 $11,045 $11,609 $12,074 $12,557 $13,059 $13,581

Expenses/Unit $0 $4,896 $5,244 $5,487 $5,719 $5,907 $6,100 $6,286 $6,477

NOI/Unit $0 $5,420 $5,228 $5,558 $5,890 $6,167 $6,456 $6,773 $7,104

Cap Rate of ALL In Costs 5.69% 5.49% 5.83% 6.18% 6.47% 6.78% 7.11% 7.46%

DSCR 0 1.26 1.21 1.29 1.37 1.31 1.38 1.22 1.29

PROFORMA

INCOME Appraisal Mar-14 Nov-14 Nov-15 Nov-16 Nov-17 Nov-18 Nov-19 Nov-20

Rent - Gross Possible $3,941,186 $11,873 /unit $3,989,424 $3,989,424 $3,989,424 $4,149,001 $4,314,961 $4,487,559 $4,667,062

Loss to Lease/Concessions ($482,487) $1,078 /unit ($362,064) ($166,764) $14,676 $15,263 $15,874 $16,509 $17,169

$0 $3,458,699 $3,627,360 $3,822,660 $4,004,100 $4,164,264 $4,330,835 $4,504,068 $4,684,231

Vacancy ($152,366) ($679) /unit ($228,309) ($239,365) ($239,365) ($248,940) ($258,898) ($269,254) ($280,024)

Bad Debt ($21,572) 1% /unit ($37,611) ($37,501) ($37,501) ($39,001) ($40,561) ($42,183) ($43,870)

Admin Unit incl models ($17,205) 3.5 ($41,557) ($41,557) ($41,557) ($43,219) ($44,948) ($46,745) ($48,615)

Other Income $198,845 $592 /unit $198,845 $206,799 $215,071 $223,674 $232,621 $241,925 $251,602

Effective Gross Revenue $0 $3,466,401 CPIInc 4.00% $3,518,729 $3,711,036 $3,900,748 $4,056,778 $4,219,049 $4,387,811 $4,563,324

1.51% 5.47% 5.11% 4.00% 4.00% 4.00% 4.00%

EXPENSES Appraisal 0 Mar-14 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7Administrative $61,864 $220 /unit $73,920 $76,138 $78,422 $80,774 $83,198 $85,694 $88,264

Marketing Expense $80,323 $250 /unit $84,000 $86,520 $89,116 $91,789 $94,543 $97,379 $100,300

R&M $86,807 $600 /unit $201,600 $207,648 $213,877 $220,294 $226,903 $233,710 $240,721

Utilities $97,345 $298 /unit $100,265 $103,273 $106,372 $109,563 $112,850 $116,235 $119,722

Payroll $380,047 $1,100 /unit $369,600 $380,688 $392,109 $403,872 $415,988 $428,468 $441,322

Insurance $70,290 $218 /unit $73,416 $75,618 $77,887 $80,223 $82,630 $85,109 $87,662

RE Taxes (Peor Projection) $761,000 $2,265 /unit $788,853 $839,432 $885,811 $916,947 $949,178 $977,653 $1,006,983

Management Fees $107,470 2.0% /unit $70,375 $74,221 $78,015 $81,136 $84,381 $87,756 $91,266

Total Expenses $0 $1,645,146 336 units $1,762,028 $1,843,538 $1,921,607 $1,984,598 $2,049,669 $2,112,003 $2,176,241

CPIExp 3.00% 7.10% 4.63% 4.23% 3.28% 3.28% 3.04% 3.04%

NOI Before RR $0 $1,821,255 $1,756,700 $1,867,498 $1,979,141 $2,072,180 $2,169,380 $2,275,808 $2,387,083

-4% 6% 6% 5% 5% 5% 5%Replacement Reserve $84,000 $250 /unit $84,000 $84,000 $84,000 $84,000 $84,000 $84,000 $84,000

NOI After RR $0 $1,737,255 $1,672,700 $1,783,498 $1,895,141 $1,988,180 $2,085,380 $2,191,808 $2,303,083

ACTUAL

Normalized

Normalized

Normalized

CASH FLOW Nov-15 Nov-16 Nov-17 Nov-18 Nov-19 Nov-20 Nov-21NOI after RR $1,672,700 $1,783,498 $1,895,141 $1,988,180 $2,085,380 $2,191,808 $2,303,083

Annual Debt Service $1,130,986 $1,130,986 $1,130,986 $1,130,986 $1,130,986 $1,130,986 $1,130,986

Supp/2nd Mortgage $250,007 $250,007 $250,007 $385,215 $385,215 $660,291 $660,291

Cash Flow after Debt Service $291,707 $402,505 $514,147 $471,980 $569,179 $400,531 $511,806

PMT(Financing!F21/12,Financing!E20*12,Financing!F15,0)

RETURN OF CAPITAL Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7Equity Balance Equity Override: $8,797,864 $9,385,943 $9,922,032 $8,683,856 $9,080,261 $6,306,174 $6,536,260

Cash Flow for Distribution Rehab Costs: $291,707 $402,505 $514,147 $471,980 $569,179 $400,531 $511,806

Capital Event Distribution $0 $0 $1,716,233 $0 $3,112,935 $0 $9,774,522

Preferred Return 10.0% $879,786 $938,594 $992,203 $868,386 $908,026 $630,617 $653,626

ROC/Shortfall ($588,079) ($536,089) $1,238,177 ($396,406) $2,774,088 ($230,086) $9,632,702

CoC 3.3% 4.3% 5.2% 5.4% 6.3% 6.4% 7.8%

Cumulative Distribution $291,707 $694,212 $2,924,592 $3,396,572 $7,078,686 $7,479,217 $24,301,805

REFINANCE SCENARIO Oct-13 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7Value at Cap Rate $31,586,455 5.50% $30,412,731 $32,427,240 $34,457,104 $36,148,734 $37,915,999 $39,851,055 $41,874,233

Per Unit Exit Cap Override 0.00% $90,514 $96,510 $102,551 $107,586 $112,845 $118,604 $124,626

Maximum Financing 68% $20,680,657 $22,050,523 $23,430,831 $24,581,139 $25,782,879 $27,098,717 $28,474,478

Payoff 1st Mortgage ($18,325,076) ($17,978,933) ($17,617,537) ($17,240,216) ($16,846,268) ($16,434,960) ($16,005,528)

Supplemental Loan $5,813,294 $0 $8,936,611 $0 $0

Cost of Loan 2.00% ($116,266) $0 ($178,732) $0 $0

Payoff 2nd Mortgage ($3,980,795) ($5,644,944)

Available For Distribution If negative, no distrbution/supplemental: $1,716,233 $0 $3,112,935 $0 $0

SALES SCENARIO Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7Value at Cap Rate 5.50% $30,412,731 $32,427,240 $34,457,104 $36,148,734 $37,915,999 $39,851,055 $41,874,233

Per Unit $90,514 $96,510 $102,551 $107,586 $112,845 $118,604 $124,626

Cost of Sale 2.00% ($608,255) ($648,545) ($689,142) ($722,975) ($758,320) ($797,021) ($837,485)

Equity Returned ($8,797,864) ($9,385,943) ($9,922,032) ($8,683,856) ($9,080,261) ($6,306,174) ($6,536,260)

Return of Escrows and Reserves $591,230 $591,230 $591,230 $591,230 $591,230 $591,230 $591,230

Payoff 1st Mortgage ($18,325,076) ($17,978,933) ($17,617,537) ($17,240,216) ($16,846,268) ($16,434,960) ($16,005,528)

Payoff 2nd Mortgage ($4,130,059) ($4,057,036) ($3,980,795) ($5,731,323) ($5,644,944) ($8,831,892) ($8,720,438)

Remaining Dollars ($857,292) $948,013 $2,838,828 $4,361,595 $5,586,205 $7,481,008 $9,774,522

ESTIMATED IRR Total Return IRR Equity Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7N/A N/A Yes Yes

Yes

1 yr Leveraged $8,232,279 -6% $8,232,279

2 yr Leveraged $11,028,168 12% $291,707 $10,736,461

3 yr Leveraged $13,969,219 17% $291,707 $402,505 $13,275,008

4 yr Leveraged $16,442,022 18% $291,707 $402,505 $2,230,380 $13,517,430

5 yr Leveraged $18,632,217 18% $291,707 $402,505 $2,230,380 $471,980 $15,235,646

7 yr Leveraged $24,301,804 19% $291,707 $402,505 $2,230,380 $471,980 $3,682,114 $400,531 $16,822,588

3 yr Unleveraged $39,710,532 8% $1,672,700 $1,783,498 $36,254,333

5 yr Unleveraged $47,173,808 9% $1,672,700 $1,783,498 $1,895,141 $1,988,180 $39,834,289

7 yr Unleveraged $55,547,768 9% $1,672,700 $1,783,498 $1,895,141 $1,988,180 $2,085,380 $2,191,808 $43,931,061

$0

($31,997,864)

($8,797,864)

($31,997,864)

Asset Pricing/Debt Equivalent$30,500,000 $0

$0

($31,997,864)

Selective Cash-Out Refinance:

($8,797,864)

($8,797,864)

$1,130,986

$250,007

($8,797,864)

($8,797,864)

Disposition

($8,797,864)

The following image is the rental income projections for the first three years. As this underwriting is designed for use in underwriting “value-add” properties, displaying the income during the initial three years is designed to articulate the impact of increased rent projections, as well as projected changes in vacancy and loss to lease during the acquisition and rehabilitation periods.

Institutional AssetAustin, TX

Assumptions:

Units 336

Current Occupancy 4.2%

Lease Turnover/Month 28

Loss to Lease/Unit $112

Avg Rent Increases

Year 1 $55 B15 From Current Rent Roll

Year 2 $45 C15 from Beginning Monthly Rent OR Current Rent Roll

Year 3 $45 100% Monthly Income Reference "Selection Factor"

YEAR ONE Jan-14 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Total

Rent - Gross Possible $334,007 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $3,989,424

Loss to Lease/Concessions ($37,502) ($35,947) ($35,947) ($35,947) ($34,407) ($32,867) ($31,327) ($29,787) ($28,247) ($26,707) ($25,167) ($23,627) ($22,087) ($362,064)

$296,505 $296,505 $296,505 $296,505 $298,045 $299,585 $301,125 $302,665 $304,205 $305,745 $307,285 $308,825 $310,365 $3,627,360

Vacancy ($13,942) ($13,877) ($16,623) ($18,285) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($228,309)

TOTAL Rent Collected $282,563 $282,628 $279,882 $278,220 $278,098 $279,638 $281,178 $282,718 $284,258 $285,798 $287,338 $288,878 $290,418 $3,399,051

Economic Vacancy 4.2% 4.2% 5.0% 5.5% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0%

Economic Occupancy 95.8% 95.8% 95.0% 94.5% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0%

Effective Rent Increase $0 $0 $0 $55 $55 $55 $55 $55 $55 $55 $55 $55 $55

YEAR TWO Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Total

Rent - Gross Possible LTL: "Include" or Not: $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $3,989,424

Loss to Lease/Concessions N/A ($20,827) ($19,567) ($18,307) ($17,047) ($15,787) ($14,527) ($13,267) ($12,007) ($10,747) ($9,487) ($8,227) ($6,967) ($166,764)

$311,625 $312,885 $314,145 $315,405 $316,665 $317,925 $319,185 $320,445 $321,705 $322,965 $324,225 $325,485 $3,822,660

Vacancy ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($239,365)

TOTAL Rent Collected $291,678 $292,938 $294,198 $295,458 $296,718 $297,978 $299,238 $300,498 $301,758 $303,018 $304,278 $305,538 $3,583,295

Economic Vacancy 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0%

Economic Occupancy 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0%


YEAR THREE Month 25 Month 26 Month 27 Month 28 Month 29 Month 30 Month 31 Month 32 Month 33 Month 34 Month 35 Month 36 Total

Rent - Gross Possible LTL: "Include" or Not: $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $332,452 $3,989,424

Loss to Lease/Concessions N/A ($5,707) ($4,447) ($3,187) ($1,927) ($667) $593 $1,853 $3,113 $4,373 $5,633 $6,893 $8,153 $14,676

$326,745 $328,005 $329,265 $330,525 $331,785 $333,045 $334,305 $335,565 $336,825 $338,085 $339,345 $340,605 $4,004,100

Vacancy ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($19,947) ($239,365)

TOTAL Rent Collected $306,798 $308,058 $309,318 $310,578 $311,838 $313,098 $314,358 $315,618 $316,878 $318,138 $319,398 $320,658 $3,764,735

Economic Vacancy 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0%

Economic Occupancy 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0% 94.0%


THREE YEAR RENT ESCALATION

This image is the real estate/property tax projections for the asset, and all subsequent images (of additional tabs/sheets in the Excel workbook) are for internal use of the company/organization.

Assessed/Inc in Value 85% 90% 5.0% 3.0% 3.0%

Purchase Price Inc in non Adv 1.0% 0.5% 0.5% 0.5% 0.5%

$30,500,000 Inc in Millage 1.0% 0.5% 0.5% 0.5% 0.5%

2013 2014 2015 2016 2017 2018

School Assess $24,070,000 $25,925,000 $27,450,000 $28,822,500 $29,687,175 $30,577,790

Non School Assess $0 $27,450,000 $28,822,500 $29,687,175 $30,577,790

School Millage 30.1270 30.4283 30.5804 30.7333 30.8870 31.0414

Non School Millage - - - - -

Non Adv $0 $0 $0 $0 $0

0% Discount 100% $725,157 $788,853 $839,432 $885,811 $916,947 $949,178

$725,157 $788,853 $839,432 $885,811 $916,947 $949,178

Institutional Asset

Assumptions/Projections - Real Estate Taxes

The rehabilitation of a “Value-Add” asset includes all construction costs and associated fees for repairs and upgrades in an integrated “Rehab” tab/worksheet associated with each asset. With a value add asset, this displayed in the following three images.

Units 336Bedrooms 420

Bathrooms 420

IMMEDIATE REPAIRS Budget

months 10,000$

months

months

months

Total Immediate Repairs 10,000$

AMENITY UPGRADES Budget

Site Signage 30,000$

Landscape and Tree Trim 75,000$

Irrigation 20,000$

Security Cameras 10,000$

Handi Trac 15,000$

Trash Compactor 52,000$

Club House/ Leasing center 65,000$

Pergula's # of 4,000$

Coffee Shop 2,500$

Fitness Center 7,500$

Fitness equipment 15,000$

Pools / # of

Sports court / type 8,000$

Laundry Facilities # of

Golf Cart

Kids center 5,000$

Dog park 7,500$

BBQ Area 4,000$

Wi-Fi 5,000$

Office Equipment/ Computers 5,000$

Office Furniture 10,000$

Club House Furniture 25,000$

Model Furniture # of 10,000$

Pool Furniture # 0f 12,500$

Total Amenities Costs 388,000$

Time to Complete Repairs

Rehab. Budget Section One

EXTERIOR # of Units Cost per Unit BudgetRoofs Repairs / Replace

Siding

Soffit and Facia

Gutters, Down Spouts, Pads

Exterior Painting $ 350 -$

Patio Decks

Hallways / Entrences (Railings

Painted/Stairways)

Exterior Lighting

Fencing

Parking Lot Repairs Concrete / Asphalt

Seal and Stripe

Walk ways / Flat work

Pavers

Retaining Walls

Locksets

Misc -$ Total Exterior Costs -$

KITCHENS/BATHS # of Units Per Unit Budget

Kitchen

Refrigerators $ 550 -$

Stoves/Ranges $ 380 -$

Hoods $ 50 -$

Microwaves $ 250 -$

Dish Washers $ 300 -$

Cabinets Paint boxes $ 250 -$

Cabinets Replace Doors $ 650 -$

Cabinet Hardware $ 100 -$

Counter tops Spray $ 250 -$

Kitchen Faucets $ 100 -$

Flooring/ Kitchen $ 3.00 -$

Flooring /Foyer $ 3.00 -$

Flooring W/D area $ 3.00 -$

Total Kitchen Costs -$

All Bathrooms

Vanities Spray box $ 75 -$

Vanities Replace Doors $ 100 -$

Vanities Hardware $ 25 -$

Vanity Spray Top $ 75 -$

Bathroom Faucets $ 60 -$

Curved Shower Rods $ 45 -$

Flooring / Type $ 3.00 -$

Water Savings ($45) $ 45 -$

Total Bathroom Costs -$

Rehab. Budget Section Two

INTERIOR

# of

Units

Cost per

Unit BudgetInterior Paint 1 Color $ 350 -$

Carpet Clean $ 100 -$

Carpet New $ 900 -$

Lighting Package $ 425 -$

Final unit clean $ 100 -$

Final punch $ 300 -$

Total Interior -$

MECHANICALS

# of

Units

Cost per

Unit Budget

Hot Water Heaters $ 400 -$

Air Conditioning Handlers $ 900 -$

Air Conditioning Condensors $ 1,280 -$

Smoke Detectors Battery / Hard Wired $ 60 -$

Carbon Monoxide Detectors $ 75 -$

Water Conservation $ 50 -$ Poly Pipes $ 350 -$

GFCI -$

Washer and Dryer Sets $ 975 -$

Meter Banks -$

Fire Inspection/Systems -$

Miscellaneous -$

Total Mechanicals -$

Total Hard Costs 398,000$

Per Unit $1,185

SOFT COSTS

Renovation Contingency & Interest Reserve $100,000

Marketing $35,000

Management Rehab Fee $0

Total Soft Costs $135,000

Total 0$

Per Unit $0.00

Default (Override) Rehab Cost/Unit 0$

Rehab. Budget Section Three

Additional Sheets from Sample Underwriting Template The following section contains two images from two of the tabs/sheets excerpted another Excel underwriting template. This data would NOT typically be seen by an investor. The first image is excerpted from the “Financing” tab/sheet of an underwriting Excel workbook. Once the broker provided data is entered, all aspects of the financing structure and holding period can be controlled on this one tab, while providing verification of how the potential return is impacted by these changes. This area reflects and manages all cash flow portions of the file via the use of single cell controls interacting with automated/reactive formulas in the other portions of file. This section provides confirmation of changes made to the structure of investment and financing. These changes can then be referenced in a matrix to show an array of options. A record of the impact of these debt options can then can then be retained on the Debt Comparison Matrix for future reference.

Original Loan Amount $19,000,000 22,875,000$ 19,000,000$ $4,200,000 $23,765,868

Max. Supplemental N/A N/A N/A 72% N/A

Origination Date 10/15/2013 11/15/14 10/15/13 11/15/14 7/15/23

Loan Term 10 7 10 9 7

Interest Rate 4.32% 4.25% 4.32% 4.32% 5.32%

IO Months 0 36 0 0 0

Amortization 360 360 360 360 360

Remaining IO Months 0 36 0 0 0

IO End Date 10/15/13 11/14/17 10/15/13 10/15/13 Jul-23

Maturity date Oct-23 Nov-21 Oct-23 Jul-23 Jul-30

Constant 5.95% 5.90% 5.95% 5.95% 6.68%

DSC 1.61 1.35 1.61 1.32 1.60

Annual Debt Service $1,130,986 $1,350,375 $1,130,986 $250,007 $1,587,220

Agency Debt Yes Yes Yes Cash Out

YesAgency Debt (Agency or Blank) Agency

10 07/15/23

Year 3 Supplemental Override Permit 11/15/17

Year 5 Supplemental Override Permit 11/15/19

Investment Disposition Window August-21 November-21

Cash Out @ Full REFI No 7/15/23

City/State WFH 80%:Med. HH Income WFH 100%:Housing Cost Factor WFH 120%:

ACQUISITION DEBT MATRIX LEGENDData to Populate Insert Data Disposition Date November-21Do NOT Populate Auto-Calc or N/A NOI Value @ DISPO. $41,705,634"Key" Cell "$0" or Existing Debt Balance @ DISPO. $24,725,965

Reversion Equity $16,979,669

Debt Matrix

EXISTING NEW DEBT ACQ. DEBTSUPP./2nd Mort.

@ Acqusition

Primary

REFINANCE

Supplemental/2nd Mortgage? (Yes or No)

Refinance Factor (Years after New Debt, -90 Days)

DISPOSITION DATA

Market/MSA $889$47,631 $1,111

28% $1,334

#1 #2 #3 #4 #5 #6 #7 #8 #9 #10

$19,000,000

$2,960,000 N/A N/A N/A N/A N/A N/A N/A N/A

11/11/14

10

4.32%

0

360

0 -1,378 -1,378 -1,378 -1,378 -1,378 -1,378 -1,378 -1,378 -1,378

11/11/14 1/0/00 1/0/00 1/0/00 1/0/00 1/0/00 1/0/00 1/0/00 1/0/00 1/0/00

11/10/24 1/0/00 1/0/00 1/0/00 1/0/00 1/0/00 1/0/00 1/0/00 1/0/00 1/0/00

5.95% #NUM! #NUM! #NUM! #NUM! #NUM! #NUM! #NUM! #NUM! #NUM!

1.61 #NUM! #NUM! #NUM! #NUM! #NUM! #NUM! #NUM! #NUM! #NUM!

$1,130,986 #NUM! #NUM! #NUM! #NUM! #NUM! #NUM! #NUM! #NUM! #NUM!

IRR Year 1 -6% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%IRR Year 2 12% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%IRR Year 3 17% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%IRR Year 5 18% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%IRR Year 7 19% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%IRR Year 10 N/A 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

Debt/Hold Schedule Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10No No No No No No Yes No No No

Anniversary Date 11/11/15 11/11/16 11/11/17 11/11/18 11/11/19 11/11/20 11/11/21 11/11/22 11/11/23 11/11/24

No No Yes Yes Yes Yes Yes Yes No NoNo No No No No No No No No NoNo No No No No No No No Yes Yes

Supplemental @ Acquisition No No No No No No No No No No

Debt Comparison Matrix

Origination Date

Loan Term

Max. Supplemental

New Debt New Debt New Debt New Debt

Original Loan Amount

New Debt New DebtExisting DebtSupplemental

Years 3 & 5New Debt New DebtOptions:

Debt Type

Interest Rate

IO Months

Amortization

Maturity date

Constant

Remaining IO Months

DSC

Annual Debt Service

Projected Sale Period

IO End Date

Assume Existing First MortgageNew First MortgageFirst Mortgage Refinance

The following image is an excerpt of one of two investment waterfalls within the template.

Portfolio Name

Acquisition Date 11/11/14Anniversary Date 11/11/14 11/11/15 11/11/16 11/11/17 11/11/18 11/11/19 11/11/20 11/11/21 11/11/22

Investment Disposition Window 08/13/21 11/11/21

Cash-Out Refi Cash-Out Refi Sale

Cash Flows Equity Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 IRR

Expected Cash Flows: 7 Years ($8,797,387) $291,707 $402,505 $2,230,380 $471,980 $3,682,114 $400,531 $17,199,583 19%

Equity GP Partner #1 75.0% (9,748,040)$ 218,780$ 301,879$ 1,672,785$ 353,985$ 2,761,585$ 300,398$ 11,530,178$ 10%

Equity Partner #2 10.0% (1,299,739)$ 29,171$ 40,250$ 223,038$ 47,198$ 368,211$ 40,053$ 1,537,357$ 10%

Equity Partner #3 10.0% (1,299,739)$ 29,171$ 40,250$ 223,038$ 47,198$ 368,211$ 40,053$ 1,537,357$ 10%

Equity Partner #4 5.0% (649,869)$ 14,585$ 20,125$ 111,519$ 23,599$ 184,106$ 20,027$ 768,679$ 10%

Equity Partner #5 0.0% -$ -$ -$ -$ -$ -$ -$ -$ 0%

(12,997,387)$ 291,707$ 402,505$ 2,230,380$ 471,980$ 3,682,114$ 400,531$ 15,373,570$

Preferred ROC Yield 10%/15% Threshold 10% Preferred ROC Yield 10% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Equity GP Partner #1 10% 974,804$ 1,050,406$ 1,125,259$ 1,070,507$ 1,142,159$ 980,216$ 1,048,198$

Shortfall Pref/Principal Returned (756,024)$ (748,528)$ 547,526$ (716,522)$ 1,619,427$ (679,818)$ 10,481,980$

Principal Remaining/15% Threshold 10,504,064$ 11,252,592$ 10,705,066$ 11,421,588$ 9,802,162$ 10,481,980$

Equity Partner #2 10% 129,974$ 140,054$ 150,035$ 142,734$ 152,288$ 130,695$ 139,760$

Shortfall Pref/Principal Returned (100,803)$ (99,804)$ 73,003$ (95,536)$ 215,924$ (90,642)$ 1,397,597$


Equity Partner #3 10% 129,974$ 140,054$ 150,035$ 142,734$ 152,288$ 130,695$ 139,760$

Shortfall Pref/Principal Returned (100,803)$ (99,804)$ 73,003$ (95,536)$ 215,924$ (90,642)$ 1,397,597$


Equity Partner #4 10% 64,987$ 5,040$ 3,532$ (7,267)$ (10,354)$ (29,800)$ (34,782)$

Shortfall Pref/Principal Returned (50,402)$ 15,085$ 107,987$ 30,866$ 194,459$ 49,826$ 803,461$

Principal Remaining/15% Threshold 50,402$ 35,316$ (72,671)$ (103,537)$ (297,996)$ (347,823)$

Equity Partner #5 10% -$ -$ -$ -$ -$ -$ -$

Shortfall Pref/Principal Returned -$ -$ -$ -$ -$ -$ -$

Principal Remaining/15% Threshold -$ -$ -$ -$ -$ -$

Investment Waterfall

15% 15% Threshold Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

20% Promote Payment to GP 20% $1,941,611

80% Distribution to Investors to 15% IRR 80% $7,766,445

Equity GP Partner #1 (9,748,040)$ 218,780$ 301,879$ 1,672,785$ 353,985$ 2,761,585$ 300,398$ 17,355,010$ 15.0%

Equity Partner #2 (1,299,739)$ 29,171$ 40,250$ 223,038$ 47,198$ 368,211$ 40,053$ 2,314,001$ 15.0%

Equity Partner #3 (1,299,739)$ 29,171$ 40,250$ 223,038$ 47,198$ 368,211$ 40,053$ 2,314,001$ 15.0%

Equity Partner #4 (649,869)$ 14,585$ 20,125$ 111,519$ 23,599$ 184,106$ 20,027$ 1,157,001$ 15.0%

Equity Partner #5 -$ -$ -$ -$ -$ -$ -$ -$

(12,997,387)$ 291,707$ 402,505$ 2,230,380$ 471,980$ 3,682,114$ 400,531$ 23,140,014$ 15.0%

75/25 Waterfall to Exit Cash Distribution

Remaining Cash Flow: (7,882,042)$

25% Promote to GP 25% (1,970,510)$

75% Distribution to Investors 75% (5,911,531)$

Equity GP Partner #1 (4,433,649)$

Equity Partner #2 (591,153)$



Equity Partner #5 -$

TOTAL EXIT CASH FLOW DISTRIBUTED: 17,199,583$

Equity GP Partner #1 (9,748,040)$ 218,780$ 301,879$ 1,672,785$ 353,985$ 2,761,585$ 300,398$ 12,892,462$ 11%

Equity Partner #2 (1,299,739)$ 29,171$ 40,250$ 223,038$ 47,198$ 368,211$ 40,053$ 1,722,848$ 11%

Equity Partner #3 (1,299,739)$ 29,171$ 40,250$ 223,038$ 47,198$ 368,211$ 40,053$ 1,722,848$ 11%

Equity Partner #4 (649,869)$ 14,585$ 20,125$ 111,519$ 23,599$ 184,106$ 20,027$ 861,424$ 11%

Equity Partner #5 -$ -$ -$ -$ -$ -$ -$ -$ 0%

Deal IRR (12,997,387)$ 291,707$ 402,505$ 2,230,380$ 471,980$ 3,682,114$ 400,531$ 17,199,583$ 11%

Additional Tabs/Sheets NOT Provided

Additional tabs/sheets within this template that are not provided are a Sources and Uses tab/sheet, and three separate tabs/sheets that apply to First Mortgage Financing, Second/Supplemental Mortgages (including strategic “Cash-Out” refinancing), as well as what is required for portfolio underwriting.

kmt sample 7.16

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