539 E 87 TH STREET UPPER EAST SIDE RESIDENTIAL

Tajdid Ajman

Nan Chen

Yannylbis Jimenez

Alex Xing Liu

Sze Nga Yip

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Property Summary Property Description

• Upper Eastside Residential Apartment Building

• Address: 539 E 87th Street

• Stories: 5

• Block: 1584

• Lot: 20

• Lot Size: 25’ x 100.67’

• Gross Sq. Footage: 9,840 SF (irr. approx.)

• Lot Area: 2,517 SF (approx.)

• Zoning: R8B

• FAR: 4.0

• Buildable Square Feet: 10,068 SF (approx.)

• Air Rights Remaining: 228 (approx. Subject to Sliver Law)

• The property is a five (5) story apartment building located on the North side of East 87th Street between York and East End Avenue.

• The building contains ten (10) residential units of which 2 are garden duplexes and 8 are 3 bedroom and 2 bath.

• All units are Free Market.

• The exterior has been substantially renovated and the interior was gutted and rebuilt.

• The highlights of each unit includes:

• extra high ceilings, oversized solid doors, and oak strip flooring

• A/C window units

• all aluminum kitchen appliances

• exposed brick walls, thermo pane windows, and marble window sills

• countertops and bathrooms

• dental crown molding, and recessed lighting

• a washer and dryer

• boiler and hot water tank

• updated security system

Photo

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SEntrance

Kitchen

Living Room

Bathroom

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SAmenities (Unit with Washer and Dryer)

Stairs

Interior

Floor Plan with Garden

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Regional Map

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Local Map

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Easy Access to Mass Transit

• Some nearby transportation hubs include:

• The FDR Drive, which is about 1 block away.

• E. 90th Street Ferry Terminal which can take you to Wall Street and other ports along the east river.

• The 4, 5 and 6 trains are situated about 5 blocks away.

• Nearby buses within a 2 block radius includes the M80, M86, M31 and the M15 SBS.

• The location shows promise as it is also located close to the Gracie Mansion and nearby Carl Schurz Park.

Aerial Map

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Population by Occupation

New York, NY

United States

The Market

Economy New York, NY United States

Unemployment Rate 8.90% 8.60%

Recent Job Growth 0.47% 0.35%

Future Job Growth 32.04% 32.10%

Sales Taxes 8.88% 5.00%

Income Taxes 10.12% 4.70%

Income per Cap. $88,698 $26,154

Household Income $90,363 $50,935

Population by Occupation

New York, NY United States

Management, Business, and Financial Operations

29.10% 14.04%

Professional and Related Occupations

37.84% 20.61%

Service 6.53% 14.45%

Sales and Office 23.45% 26.75%

Farming, Fishing, and Forestry

0.00% 0.70%

Construction, Extraction, and Maintenance

1.17% 9.42%

Production, Transportation, and Material Moving

1.90% 14.05%

0.00%10.00%20.00%30.00%40.00%

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Economy

New York, NY

United States

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Demographics

0%

7%4%

9%

2%

0%

0%78%

American Indian

Asian

Black

Hispanic

Multiple

Native Hawaiian

Other

Household Income Distribution

8% 4% 6%

7%

12%

16%

11%13%

7%16%

<10K

10-15K

15-25K

25-35K

35-50K

50-70K

75-100K

100-150K

150-200K

>200K

• Local households have the greatest percentages of income distribution over 50K.

• Household incomes over 200K are common in the area at 15.4%,which is the second highest in income distribution within the area.

• The income distribution assures owners that rents will be paid on time.

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ITYSchool District

Household Income Distribution

Education

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00%

Percentage

• The majority of the community is well educated as most have Bachelors and/or Graduate Degrees.

• The school district is one of the best in New York with an average rating of 8.2 out of 10.

• Schools in the community will definitely attract tenants as education is an important factor when looking for a place to live.

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Rent Roll

Unit Tenant Sq. Ft. Lease Exp. Rent (monthly) Rent (annually)

1E 11,789

8/31/13 $4,600.00 $55,200.00

1W 2 9/30/13 $4,600.00 $55,200.00

2F 31,789

12/31/12 $4,150.00 $49,800.00

2R 4 7/14/13 $4,400.00 $52,800.00

3F 51,789

5/31/13 $4,100.00 $49,200.00

3R 6 8/31/13 $4,200.00 $50,400.00

4F 71,789

8/31/13 $4,150.00 $49,800.00

4R 8 7/31/13 $4,033.00 $48,396.00

5F 91,789

8/31/13 $4,100.00 $49,200.00

5R 10 10/31/12 $3,950.00 $47,400.00

Total 8,945 $42,283.00 $507,396.00

• Before expenses, the property should bring in a rent revenue of $507,396.00.

• The rent is expected to increase 3% per year with a CPI Inflation rate of 2%.

• As the rent is expected to increase, the rent revenue will also increase and this will be ideal for the owner and investors.

• As revenue increases and expenses stay more or less the same, the amount borrowed from investors and their expected returns shall be reimbursed immediately.

Property Rent Roll

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Annual Pro Forma Operational Cash Flow

Year: 1 2 3 4 5 6 7 8 9 10 11

Revenues

Rent Revenue $507,396 $522,618 $538,296 $554,445 $571,079 $588,211 $605,857 $624,033 $642,754 $662,037 $681,898

Vacancies Rate(5%) $ 25,370 $ 26,131 $ 26,915 $ 27,722 $ 28,554 $ 29,411 $ 30,293 $ 31,202 $ 32,138 $ 33,102 $ 34,095

Effective Gross Income $482,026 $496,487 $511,382 $526,723 $542,525 $558,800 $575,564 $592,831 $610,616 $628,935 $647,803

Expenses

Water & Sewer $5,000 $5,100 $5,202 $5,306 $5,412 $5,520 $5,631 $5,743 $5,858 $5,975 $6,095

Insurance $8,574 $8,745 $8,920 $9,099 $9,281 $9,466 $9,656 $9,849 $10,046 $10,247 $10,452

Repair and Maintenance $2,500 $2,550 $2,601 $2,653 $2,706 $2,760 $2,815 $2,872 $2,929 $2,988 $3,047

Management(2% EFI) $9,641 $9,930 $10,228 $10,534 $10,850 $11,176 $11,511 $11,857 $12,212 $12,579 $12,956

Super $12,000 $12,240 $12,485 $12,734 $12,989 $13,249 $13,514 $13,784 $14,060 $14,341 $14,628

Property Tax $36,453 $37,182 $37,926 $38,684 $39,458 $40,247 $41,052 $41,873 $42,710 $43,565 $44,436

Net Operating Income $407,859 $420,740 $434,020 $447,712 $461,828 $476,381 $491,385 $506,854 $522,800 $539,240 $556,189

• The increasing net operating income insures that the property will have higher returns as time progresses.

• This makes the property a very attractive investment to potential investors and future owners of the property.

Financials

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10 Year Projection (All Equity)

Year 0 1 2 3 4 5 6 7 8 9 10 11

Cap Rate

Net Operating Income $407,859 $420,740 $434,020 $447,712 $461,828 $476,381 $491,385 $506,854 $522,800 $539,240 $556,189

NPV (2%) $4,208,368

Cash Flow -$8,750,000 $407,859 $420,740 $434,020 $447,712 $461,828 $476,381 $491,385 $506,854 $522,800 $12,471,442

IRR 7.81%

NPV (2%) $13,996,929

Profit $5,246,929

Profit/Purchase Price + Renovation 60%

10 Year Projection (Debt and Jr. Loan) With 4.66% Cap Going In and Out Cap

Year 0 1 2 3 4 5 6 7 8 9 10 11

Cap Rate

Net Operating Income $407,859 $420,740 $434,020 $447,712 $461,828 $476,381 $491,385 $506,854 $522,800 $539,240 $556,189

Debt -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$5,203,030

Capital Expenditure -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000

Cash flow $42,964 $55,845 $69,125 $82,817 $96,933 $111,486 $126,490 $141,958 $157,905 $7,253,412

JV(75 %) -$2,000,000 $32,223 $41,883 $51,844 $62,113 $72,700 $83,615 $94,868 $106,469 $118,429 $5,440,059

JV IRR 12.61%

Team Cash Flow -$500,000 $10,741 $13,961 $17,281 $20,704 $24,233 $27,872 $31,623 $35,490 $39,476 $1,813,353

IRR 16.22%

10 Year Projection (Debt and Jr. Loan) With 4.66 % Cap Going In and Out Cap

Year 0 1 2 3 4 5 6 7 8 9 10 11

Cap Rate

Net Operating Income $407,859 $420,740 $434,020 $447,712 $461,828 $476,381 $491,385 $506,854 $522,800 $539,240 $556,189

Debt -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$5,203,030

Capital Expenditure -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000

Cash Flow $42,964 $55,845 $69,125 $82,817 $96,933 $111,486 $126,490 $141,958 $157,905 $4,591,023

JV(75 %) -$2,000,000 $32,223 $41,883 $51,844 $62,113 $72,700 $83,615 $94,868 $106,469 $118,429 $3,443,268

JV IRR 8.13%

Team Cash Flow -$500,000 $10,741 $13,961 $17,281 $20,704 $24,233 $27,872 $31,623 $35,490 $39,476 $1,147,756

IRR 11.65%

Cap

Purchase price $ 8,750,000

Going in cap 4.66%

Reversion price(4.66 cap) $ 11,932,202

Reversion price(6 cap) $ 9,269,813

Given

Team Equity $ 500,000

InvestorsEquity $ 2,000,000

Mortgage

Annual Monthly

Loan Amount $ 6,250,000

Payment $ 349,895 $ 29,157.92

Interest rate 3.81% 0.32%

Number Payment 30 360

End of year 10 $ 4,853,135

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NThe Target Property

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Comparable 1 Comparable 2 Comparable 3

• 539 East 87th Street New York, NY 10128

• Asking Price: $8,750,000

• Price Per Sq. Ft.: $889.23

• Rentable Sq. Ft: 9,840

• NOI: $427,141

• Cap Rate: 4.88%

• 25 West 71st Street New York, NY 10023

• Asking Price: $6,955,000

• Price Per Sq. Ft: $1,229.23

• Rentable Sq. Ft: 5,658

• NOI: $214,567

• Cap Rate: 3.09%

• East 4th Street New York, NY 10003

• Asking Price: $9,000,000

• Price Per Sq. Ft: $1,058.82

• Rentable Sq. Ft: 8,500

• NOI: $458,000

• Cap Rate: 5.09%

• 108 Kenilworth Place Brooklyn, NY 11210

• Asking Price: $6,500,000

• Price Per Sq. Ft.: $278.02

• Rentable Sq. Ft: 23,380

• NOI: $374,634

• Cap Rate: 5.76%

• The target property was compared to three other properties around New York with similar asking prices and square footage.

• It was the best deal amongst all of the comparable properties located directly in New York City, as it offered more square footage for cheaper rates and showed promise in Net Operating Income as well.

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Why Invest in 539 E 87th StreetUpper East Side Residential?

• The Location is in New York City, the greatest city in the world. Times Square and Central Park are not quite far from the residence . The property is also right by the East River, which can open doors for many recreational activities and ideas for tenants. There are endless possibilities of things to do, places to go and people to see in the city. All these factors will attract tenants to the property and increase revenue.

• Education is highly rated in the area, which will attract and open doors for many tenants to further their education , their families and children.

• Stable economic activity provides insurance that the property’s value and revenue will stay at a steady pace with no drastic changes. As employment in certain sectors is expected to increase, and jobs are expected to grow, rents from tenants are assured and leases are certainly expected to be renewed.

• High income distribution in the area assures rents will be paid on time and revenues will continue to increase.

• Transportation is easily accessible. This will attract tenants, who need to get to work, school and other places in time.

• Tenants are well educated and have high incomes in the community. In addition, as jobs are expected to grow by 32.04% in the city, this may further help household incomes in the area continue to stay high and stable.

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Sources

www.bestplaces.net/economy

www.freedemographicsdata.com/new-york

Googlemaps.com

Streeteasy.com

Trulia.com