Norway-Florida Fund Overview

Posted by Joe Manausa on Sunday, March 7th, 2010 at 1:00am.

Norway-Florida Fund Overview

The purpose of this report is to demonstrate the investment benefit of targeting short sales in a long-term stable market. For the purpose of this report, 5 short sale properties were selected from the Tallahassee MLS that if purchased with the following acquisition costs, would be ready to rent at the time of closing on the property.

Size Was Is Land Structure Future Growth Rent
2,186 $230,000 $160,000 $120,000 $251,390 $371,390 132% $1,200
3,840 $360,000 $215,000 $120,000 $384,000 $504,000 134% $2,400
3,840 $360,000 $215,000 $120,000 $384,000 $504,000 134% $2,400
2,137 $275,000 $225,000 $135,000 $245,755 $380,755 69% $1,400
1,604 $140,000 $100,000 $80,000 $160,400 $240,400 140% $1,000
13,607 $1,365,000 $915,000 $575,000 $1,425,545 $2,000,545 119% $8,400

The future value was based upon estimates of replacement value, using conservative land values and current construction costs, though the sale date is 7 years after the date of acquisition. The following reports are available for review:

The Norway-Florida Fund Overview

Buy 2010 2011 2012 2013 2014 2015 2016 2017 Sell Total
Before Tax Cash Flow Projection
Investment and Sale (933,300) 0 0 0 0 0 0 0 0 1,840,501 907,201
Effective Income 0 30,912 93,045 93,976 94,915 95,864 96,823 97,791 41,017 0 644,344
Operating Expense 0 (15,765) (47,453) (47,928) (48,407) (48,891) (49,380) (49,874) (20,919) 0 (328,616)
Cash Flow Before Debt (933,300) 15,147 45,592 46,048 46,509 46,974 47,443 47,918 20,098 1,840,501 1,222,930
Debt Service 457,500 (18,681) (32,025) (32,025) (32,025) (32,025) (32,025) (32,025) (13,344) (457,500) (224,175)
Cash Flow Before Tax (475,800) (3,534) 13,567 14,023 14,484 14,949 15,418 15,893 6,755 1,383,001 998,755
Taxable Income Projection
Taxable Revenue 0 30,912 93,045 93,976 94,915 95,864 96,823 97,791 41,017 0 644,344
Taxable Expense 0 (15,765) (47,453) (47,928) (48,407) (48,891) (49,380) (49,874) (20,919) 0 (328,616)
Interest Expense 0 (18,681) (32,025) (32,025) (32,025) (32,025) (32,025) (32,025) (13,344) 0 (224,175)
Depreciation 0 (15,319) (28,282) (28,282) (28,282) (28,282) (28,282) (28,282) (10,606) 0 (195,616)
Ordinary Income 0 (18,854) (14,715) (14,259) (13,798) (13,333) (12,863) (12,389) (3,851) 0 (104,062)
After Tax Cash Flow Projection
Cash Flow Before Tax (475,800) (3,534) 13,567 14,023 14,484 14,949 15,418 15,893 6,755 1,383,001 998,755
Ordinary Income 0 (18,854) (14,715) (14,259) (13,798) (13,333) (12,863) (12,389) (3,851) 0 (104,062)
Capital Gains 0 0 0 0 0 0 0 0 0 1,102,817 1,102,817
Taxable Income 0 0 0 0 0 0 0 0 0 998,755 998,755
Taxes 0 0 0 0 0 0 0 0 0 (169,375) (169,375)
Cash Flow After Tax (475,800) (3,534) 13,567 14,023 14,484 14,949 15,418 15,893 6,755 1,213,627 829,380
Rate of Return Before Debt (IRR) 14.1%
Rate of Return Before Tax (IRR) 18.3%
Rate of Return After Tax (IRR) 16.2%
Net Present Value Before Debt @12% 112,855
Net Present Value Before Tax @12% 208,647
Net Present Value After Tax @12% 132,031

Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.

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