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 |
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