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BERKLEY APARTMENTS
712 Grayson Street, Norfolk, VA 23523
Leo Sutton
Director
+1-757-469-1537
0225-197664
Adam Sutton
Commercial Agent
(757) 256-6242
0225-197734
Easy access to DowntownNorfolk; DowntownPortsmouth, I464, and I264.
●
Within walking distance ofMajor Shipyards.
●
Many units have been recentlyRenovated.Tenants pay their own waterand electricity.
●
Newly updated LED ExteriorLighting.
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Laundry Room on property.●
Table of Contents
Real Estate Investment Details ..................................................................................... 3
Executive Summary ...................................................................................................... 4
Cash Flow Analysis ...................................................................................................... 5
Internal Rate of Return Analysis .................................................................................. 6
Annual Property Operating Data .................................................................................. 7
Annual Property Operating Data per Sq. Ft. .............................................................. 8
Investment Return Analysis .......................................................................................... 10
Property Equity Analysis ............................................................................................ 11
Gross Income Vs. Operating Expenses ...................................................................... 12
Equity vs. Debt ............................................................................................................... 13
Cumulative Wealth Analysis .......................................................................................... 14
Operating Income Analysis ........................................................................................... 15
Real Estate Investment Details
ANALYSIS
Analysis Date July 2015
PROPERTY
Property BERKLEY APARTMENTS
Property Address 712 Grayson StreetNorfolk, VA 23523
Year Built 1988
FINANCIAL INFORMATION
Down Payment $550,000
Federal Tax Rate 15.0%
State Tax Rate 5.75%
PURCHASE INFORMATION
Property Type MultiFamily
Purchase Price $2,200,000
Fair Market Value $2,200,000
Units 30
Total Rentable Sq. Ft. 24,000
Resale Valuation 3.0% (annual appreciation)
Resale Expenses 0.5%
LOANS
Debt Term Amortization Rate Payment LO Costs
Fixed $1,650,000 25 years 25 years 5.0% $9,646 $16,500
INCOME & EXPENSES
Gross Operating Income $254,098
Monthly GOI $21,175
Total Annual Expenses ($88,518)
Monthly Expenses ($7,376)
CONTACT INFORMATION
Leo Sutton
+1-757-469-1537
0225-197664
Adam Sutton
(757) 256-6242
0225-197734
The calculations and data presented are deemed to be accurate, but not guaranteed. They are intended for the purpose of illustrative projectionsand analysis. The information provided is not intended to replace or serve as substitute for any legal, accounting, investment, real estate, tax orother 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 15
Executive SummaryBERKLEY APARTMENTS
712 Grayson StreetNorfolk, VA 23523
Leo Sutton+1-757-469-1537
ACQUISITION COSTS
Purchase Price, Points and Closing Costs $2,216,500
Investment - Cash $566,500
First Loan $1,650,000
INVESTMENT INFORMATION
Purchase Price $2,200,000
Price per Unit $73,333
Price per Sq. Ft. $91.67
Income per Unit $8,914
Expenses per Unit ($2,951)
INCOME, EXPENSES & CASH FLOW
Gross Scheduled Income $267,408
Total Vacancy and Credits ($13,310)
Operating Expenses ($88,518)
Net Operating Income $165,580
Debt Service ($115,749)
Cash Flow Before Taxes $49,831
Total Interest (Debt Service) ($81,727)
Depreciation and Amortization ($77,308)
Taxable Income (Loss) $6,545
Tax Savings (Costs) ($1,358)
Cash Flow After Taxes $48,473
FINANCIAL INDICATORS
Cash on Cash Return Before Taxes 8.80%
Debt Coverage Ratio 1.43
Capitalization Rate 7.53%
Gross Rent Multiplier 8.23
Gross Income / Square Feet $11.14
Gross Expenses / Square Feet ($3.69)
Operating Expense Ratio 34.84%
page 4 of 15
Cash Flow AnalysisBERKLEY APARTMENTS
712 Grayson StreetNorfolk, VA 23523
Leo Sutton+1-757-469-1537
Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
GROSS SCHEDULED INCOME $267,408 $275,394 $283,620 $292,093 $300,819 $309,808 $319,066 $328,602 $338,424 $348,541
General Vacancy ($13,310) ($13,710) ($14,121) ($14,545) ($14,981) ($15,430) ($15,893) ($16,370) ($16,861) ($17,367)
Total Operating Expenses ($88,518) ($89,863) ($91,237) ($92,642) ($94,077) ($95,545) ($97,045) ($98,578) ($100,146) ($101,750)
NET OPERATING INCOME $165,580 $171,822 $178,262 $184,906 $191,761 $198,833 $206,128 $213,654 $221,417 $229,424
Loan Payment ($115,749) ($115,749) ($115,749) ($115,749) ($115,749) ($115,749) ($115,749) ($115,749) ($115,749) ($115,749)
NET CASH FLOW (b/t) $49,831 $56,073 $62,513 $69,158 $76,012 $83,084 $90,379 $97,905 $105,668 $113,676
Cash On Cash Return b/t 8.80% 9.90% 11.03% 12.21% 13.42% 14.67% 15.95% 17.28% 18.65% 20.07%
NET OPERATING INCOME $165,580 $171,822 $178,262 $184,906 $191,761 $198,833 $206,128 $213,654 $221,417 $229,424
Depreciation ($76,648) ($79,992) ($79,992) ($79,992) ($79,992) ($79,992) ($79,992) ($79,992) ($79,992) ($76,648)
Amortization ($660) ($660) ($660) ($660) ($660) ($660) ($660) ($660) ($660) ($660)
Loan Interest ($81,727) ($79,987) ($78,157) ($76,234) ($74,212) ($72,087) ($69,853) ($67,505) ($65,037) ($62,442)
TAXABLE INCOME (LOSS) $6,545 $11,183 $19,453 $28,021 $36,897 $46,094 $55,623 $65,497 $75,728 $89,674
Income Taxes ($1,358) ($2,321) ($4,036) ($5,814) ($7,656) ($9,564) ($11,542) ($13,591) ($15,714) ($18,607)
CASH FLOW (a/t) $48,473 $53,753 $58,477 $63,343 $68,356 $73,520 $78,838 $84,314 $89,954 $95,068
Cash On Cash Return a/t 8.56% 9.49% 10.32% 11.18% 12.07% 12.98% 13.92% 14.88% 15.88% 16.78%
Footnotes: b/t = before taxes;a/t = after taxes
page 5 of 15
Internal Rate of Return AnalysisBERKLEY APARTMENTS
712 Grayson StreetNorfolk, VA 23523
Leo Sutton+1-757-469-1537
BEFORE TAX IRR
Time Future Cash Flows
Initial Investment ($566,500)
End of Year 1 $49,831
End of Year 2 $56,073
End of Year 3 $62,513
End of Year 4 $69,158
End of Year 5 $76,012
End of Year 6 $83,084
End of Year 7 $90,379
End of Year 8 $97,905
End of Year 9 $105,668
End of Year 10* $1,835,755
IRR = 20.2% * ($113,676 + $1,722,079)
AFTER TAX IRR
Time Future Cash Flows
Initial Investment ($566,500)
End of Year 1 $48,473
End of Year 2 $53,753
End of Year 3 $58,477
End of Year 4 $63,343
End of Year 5 $68,356
End of Year 6 $73,520
End of Year 7 $78,838
End of Year 8 $84,314
End of Year 9 $89,954
End of Year 10* $1,700,217
IRR = 18.85% * ($95,068 + $1,605,149)
page 6 of 15
Annual Property Operating DataBERKLEY APARTMENTS
712 Grayson StreetNorfolk, VA 23523
Leo Sutton+1-757-469-1537
Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Rental Income $266,208 $274,194 $282,420 $290,893 $299,619 $308,608 $317,866 $327,402 $337,224 $347,341
Coin Operated Laundry $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
GROSS SCHEDULED INCOME $267,408 $275,394 $283,620 $292,093 $300,819 $309,808 $319,066 $328,602 $338,424 $348,541
General Vacancy ($13,310) ($13,710) ($14,121) ($14,545) ($14,981) ($15,430) ($15,893) ($16,370) ($16,861) ($17,367)
GROSS OPERATING INCOME $254,098 $261,685 $269,499 $277,548 $285,838 $294,378 $303,173 $312,232 $321,563 $331,174
Expenses
Property Management Fee ($26,741) ($27,539) ($28,362) ($29,209) ($30,082) ($30,981) ($31,907) ($32,860) ($33,842) ($34,854)
Building Insurance ($10,000) ($10,100) ($10,201) ($10,303) ($10,406) ($10,510) ($10,615) ($10,721) ($10,829) ($10,937)
Lawncare ($6,420) ($6,420) ($6,420) ($6,420) ($6,420) ($6,420) ($6,420) ($6,420) ($6,420) ($6,420)
Maintenance ($21,293) ($21,506) ($21,721) ($21,938) ($22,157) ($22,379) ($22,603) ($22,829) ($23,057) ($23,288)
Pest Control ($720) ($720) ($720) ($720) ($720) ($720) ($720) ($720) ($720) ($720)
Taxes - Real Estate ($17,308) ($17,481) ($17,656) ($17,832) ($18,011) ($18,191) ($18,373) ($18,557) ($18,742) ($18,930)
Trash Removal ($2,520) ($2,545) ($2,571) ($2,596) ($2,622) ($2,649) ($2,675) ($2,702) ($2,729) ($2,756)
Utility - Electricity ($2,100) ($2,121) ($2,142) ($2,164) ($2,185) ($2,207) ($2,229) ($2,251) ($2,274) ($2,297)
Utility - Water/Sewer ($420) ($424) ($428) ($433) ($437) ($441) ($446) ($450) ($455) ($459)
Utility - Storm Water ($996) ($1,006) ($1,016) ($1,026) ($1,036) ($1,047) ($1,057) ($1,068) ($1,079) ($1,089)
TOTAL OPERATING EXPENSES ($88,518) ($89,863) ($91,237) ($92,642) ($94,077) ($95,545) ($97,045) ($98,578) ($100,146) ($101,750)
NET OPERATING INCOME $165,580 $171,822 $178,262 $184,906 $191,761 $198,833 $206,128 $213,654 $221,417 $229,424
page 7 of 15
Annual Property Operating Data per Sq. Ft.BERKLEY APARTMENTS
712 Grayson StreetNorfolk, VA 23523
Leo Sutton+1-757-469-1537
Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Rental Income $11.09 $11.42 $11.77 $12.12 $12.48 $12.86 $13.24 $13.64 $14.05 $14.47
Miscellaneous Income $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05 $0.05
GROSS SCHEDULED INCOME $11.14 $11.47 $11.82 $12.17 $12.53 $12.91 $13.29 $13.69 $14.10 $14.52
General Vacancy ($0.55) ($0.57) ($0.59) ($0.61) ($0.62) ($0.64) ($0.66) ($0.68) ($0.70) ($0.72)
GROSS OPERATING INCOME $10.59 $10.90 $11.23 $11.56 $11.91 $12.27 $12.63 $13.01 $13.40 $13.80
Expenses
Property Management Fee ($1.11) ($1.15) ($1.18) ($1.22) ($1.25) ($1.29) ($1.33) ($1.37) ($1.41) ($1.45)
Building Insurance ($0.42) ($0.42) ($0.43) ($0.43) ($0.43) ($0.44) ($0.44) ($0.45) ($0.45) ($0.46)
Lawncare ($0.27) ($0.27) ($0.27) ($0.27) ($0.27) ($0.27) ($0.27) ($0.27) ($0.27) ($0.27)
Maintenance ($0.89) ($0.90) ($0.91) ($0.91) ($0.92) ($0.93) ($0.94) ($0.95) ($0.96) ($0.97)
Pest Control ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03)
Taxes - Real Estate ($0.72) ($0.73) ($0.74) ($0.74) ($0.75) ($0.76) ($0.77) ($0.77) ($0.78) ($0.79)
Trash Removal ($0.11) ($0.11) ($0.11) ($0.11) ($0.11) ($0.11) ($0.11) ($0.11) ($0.11) ($0.11)
Utility - Electricity ($0.09) ($0.09) ($0.09) ($0.09) ($0.09) ($0.09) ($0.09) ($0.09) ($0.09) ($0.10)
Utility - Water/Sewer ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02)
Utility - Storm Water ($0.04) ($0.04) ($0.04) ($0.04) ($0.04) ($0.04) ($0.04) ($0.04) ($0.04) ($0.05)
TOTAL OPERATING EXPENSES ($3.69) ($3.74) ($3.80) ($3.86) ($3.92) ($3.98) ($4.04) ($4.11) ($4.17) ($4.24)
page 8 of 15
Annual Property Operating Data per Sq. Ft.BERKLEY APARTMENTS
712 Grayson StreetNorfolk, VA 23523
Leo Sutton+1-757-469-1537
Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
NET OPERATING INCOME $6.90 $7.16 $7.43 $7.70 $7.99 $8.28 $8.59 $8.90 $9.23 $9.56
page 9 of 15
Investment Return AnalysisBERKLEY APARTMENTS
712 Grayson StreetNorfolk, VA 23523
Leo Sutton+1-757-469-1537
Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Cash Flow - To Date $48,473 $102,226 $160,703 $224,046 $292,402 $365,922 $444,759 $529,074 $619,028 $714,097
Net Resale Proceeds $630,481 $721,747 $816,873 $916,011 $1,019,324 $1,126,980 $1,239,153 $1,356,027 $1,477,792 $1,605,149
Invested Capital ($566,500) ($566,500) ($566,500) ($566,500) ($566,500) ($566,500) ($566,500) ($566,500) ($566,500) ($566,500)
Net Return on Investment $112,454 $257,473 $411,075 $573,557 $745,227 $926,402 $1,117,413 $1,318,601 $1,530,320 $1,752,745
Internal Rate of Return 19.85% 21.36% 21.33% 21.01% 20.61% 20.21% 19.83% 19.48% 19.15% 18.85%
Modified IRR 19.85% 20.60% 19.95% 19.11% 18.28% 17.53% 16.84% 16.22% 15.65% 15.14%
NPV (cash flow + reversion) $122,023 $281,498 $451,272 $631,704 $823,165 $1,026,041 $1,240,729 $1,467,644 $1,707,212 $1,959,879
PV (NOI + reversion) $2,420,250 $2,659,712 $2,907,643 $3,164,309 $3,429,983 $3,704,945 $3,989,487 $4,283,907 $4,588,512 $4,903,621
Footnotes: a/t = after taxes; Modified IRR = Modified Internal Rate of Return; PV = Present Value; NPV = Net Present Value; NOI = Net Operating IncomeReversion = Amount received from the resale; Net Return on Investment = Cash Flow (a/t To Date) + Net Proceeds from Resale - Invested Capital.
page 10 of 15
Property Equity AnalysisBERKLEY APARTMENTS
712 Grayson StreetNorfolk, VA 23523
Leo Sutton+1-757-469-1537
Year 1 2 3 4 5 6 7 8 9 10
$180,000
$360,000
$540,000
$720,000
$900,000
$1,080,000
$1,260,000
$1,440,000
$1,620,000
$1,800,000
Legend
Initial Equity Equity (loan reduction) Equity (appreciation)
page 11 of 15
Gross Income Vs. Operating ExpensesBERKLEY APARTMENTS
712 Grayson StreetNorfolk, VA 23523
Leo Sutton+1-757-469-1537
Year 1 2 3 4 5 6 7 8 9 10
$35,000
$70,000
$105,000
$140,000
$175,000
$210,000
$245,000
$280,000
$315,000
$350,000
Legend
GROSS SCHEDULED INCOME Total Operating Expenses
page 12 of 15
Equity vs. DebtBERKLEY APARTMENTS
712 Grayson StreetNorfolk, VA 23523
Leo Sutton+1-757-469-1537
Year 1 2 3 4 5 6 7 8 9 10
$180,000
$360,000
$540,000
$720,000
$900,000
$1,080,000
$1,260,000
$1,440,000
$1,620,000
$1,800,000
Legend
Equity Loan Principal Balance
page 13 of 15
Cumulative Wealth AnalysisBERKLEY APARTMENTS
712 Grayson StreetNorfolk, VA 23523
Leo Sutton+1-757-469-1537
Year 1 2 3 4 5 6 7 8 9 10
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
Legend
Equity (loan reduction) Equity (appreciation) CASH FLOW (a/t)
page 14 of 15
Operating Income AnalysisBERKLEY APARTMENTS
712 Grayson StreetNorfolk, VA 23523
Leo Sutton+1-757-469-1537
Year 1 2 3 4 5 6 7 8 9 10
$34,000
$68,000
$102,000
$136,000
$170,000
$204,000
$238,000
$272,000
$306,000
$340,000
Legend
GROSS OPERATING INCOME NET OPERATING INCOME NET CASH FLOW (b/t)
page 15 of 15