72-sp Sun Terrace MHP For Sale

Transcription

1 70-sp MHP (66 POM's)plus 2 Apartments City Water & Sewer Gross Revenue = 529K NOI = $317K 10.23% Cap Rate at Asking Price Minutes from Down Town, Clearwater Beach and International Airport Presented by benny@crescorpllc.com CRES Corp International, LLC 1228 E 7th Ave Tampa, Fl 33605

2 CRES Corp International, LLC 72-sp Sun Terrace MHP For Sale Income, Expenses & Cash Flow Property Overview Potential Rental Income $ 529,876 Purchase/Asking Price $ 3,100,000 Property Type Mobile Home Parks Other Income - Improvements - No. of Units 72 Total Vacancy and Credits (26,494) Other - Price Per Unit $ 43,056 Operating Expenses $ (186,148) Closing Costs - Total Sq Ft 1,000 Annual Reserves: $ Finance Points - Price Per Sq Ft $ 3,100 Net Operating Income (NOI) $ 317,234 Income per Unit $ 7,359 MIP Payments $ Total Acquisition Cost $ 3,100,000 Expenses per Unit $ (2,585) Annual Reserves: $ Debt Service: $ (152,227) Cash Flow Before Taxes $ 165,007 Mortgage (s) $ 2,170,000 Income Taxes: Benefit 0% - Down Payment / Investment $ 930,000 Cash Flow After Taxes $ 165,007 Assumptions Loan Information % of Asking % of Cost Rental Growth Rate: 3.00% Down Payment: $ 930, % 30.00% Expense Growth Rate: 3.00% Initial Loan Balance: $ 2,170, % 70.00% Capitalization Rate (Resale): 10.00% Marginal Tax Rate: 0.00% Loan Amount Interest Rate Term Payment Capital Gain Tax Rate: 0.00% $ 2,170, % 25 $12,686 $ 8.00% 30 $0 $ 8.00% 30 $0 Financial Measurements Year 1 Year 3 Year 7 Notes / Discussion Debt Coverage Ratio (DCR) Loan-to-Value Ratio (LVR) 67.0% 60.3% 47.6% Capitalization Rate Based on Cost 10.23% 10.86% 12.22% Capitalization Rate Based on Resale Price 10.00% 10.00% 10.00% Gross Rent Multiplier Net Present Value (NPV) - B/ Taxes Net Present Value (NPV) - A/Taxes 13.50% 137, , , % 171, ,050 1,018,495 Cash on Cash Return - Before Taxes 17.74% 19.82% 24.36% Cash on Cash Return - After Taxes 17.74% 19.82% 24.36% Internal Rate of Return - Before Taxes 29.60% 27.03% Internal Rate of Return - After Taxes 29.60% 27.03% Modified Internal Rate of Return - Before Taxes Modified Internal Rate of Return - After Taxes 26.01% 20.08% 26.01% 20.08% Disclaimer: All information presented is believed to be accurate. The information, calculations and data presented in this report are believed to be accurate but are not guaranteed. The information contained in this report shall not be considered as a substitution for legal, accounting or other professional advice. Please seek proper legal and tax advice as appropriate before making investments.

3 Property Description 72-sp Sun Terrace MHP For Sale The Sun Terrace MHP is located just minutes from Clearwater Beach and the Down Town area. This park consists of: HIGHLIGHTS 70-spaces + 2 Apartments 66 Park Owned Homes City Water & Sewer 529K Gross Revenue - $317K NOI 92% Occupied Close to Beach & Down Town Area -70-space -66 Park Owned Homes -1-2-unit Apartment -Family Park -City Water & Sewer (Submetered) -94% Occupied -GR = $529K -NOI = $317K Property also includes a Laundry Building (not currently used), Office, Recreation Building (not currently being used) and a maintenance building. Rents collected average $602 (Apartments), $253 (Lot Rent), $463 (Single Wide Units), $835 (Double-wide Units). Current rents are well below market. The owner has incorporated a 7% increase in rents for new tenants but has not increased the rents for the long tern tenants. Asking Price: $3,100,000 Feel free to contact me for further information. CRES Corp International, LLC benny@crescorpllc.com 1228 E 7th Ave 0 Tampa, Fl 33605

4 72-sp Sun Terrace MHP For Sale

5 Rental Activity Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Potential Rental Income $ 529,876 $ 545,772 $ 562,145 $ 579,010 $ 596,380 Less: Vacancy & Credit Losses (26,494) (27,289) (28,107) (28,950) (29,819) Effective Gross Income $ 503,382 $ 518,484 $ 534,038 $ 550,059 $ 566,561 Less: Operating Expenses (186,148) (191,732) (197,484) (203,409) (209,511) Net Operating Income (NOI) $ 317,234 $ 326,751 $ 336,554 $ 346,650 $ 357,050 Less: Annual Debt Service (152,227) (152,227) (152,227) (152,227) (152,227) CASH FLOW Before Taxes $ 165,007 $ 174,524 $ 184,327 $ 194,423 $ 204,823 Property Resale Analysis Projected Sales Price $ 3,172,342 $ 3,267,512 $ 3,365,538 $ 3,466,504 $ 3,570,499 Less: Selling Expenses Adjusted Projected Sales Price $ 3,172,342 $ 3,267,512 $ 3,365,538 $ 3,466,504 $ 3,570,499 Less: Mortgage(s) Balance Payoff (2,125,257) (2,078,224) (2,028,785) (1,976,817) (1,922,190) SALE PROCEEDS Before Taxes $ 1,047,085 $ 1,189,288 $ 1,336,752 $ 1,489,686 $ 1,648,308 Cash Position Cash Generated in Current Year $ 165,007 $ 174,524 $ 184,327 $ 194,423 $ 204,823 Cash Generated in Previous Years n/a 165, , , ,281 Cash Generated from Property Sale 1,047,085 1,189,288 1,336,752 1,489,686 1,648,308 Original Initial Investment (930,000) (930,000) (930,000) (930,000) (930,000) Total Potential CASH Generated $ 282,092 $ 598,819 $ 930,610 $ 1,277,967 $ 1,641,412 Financial Measurements Debt Coverage Ratio (DCR) Loan-to-Value Ratio (LVR) 67.0% 63.6% 60.3% 57.0% 53.8% Capitalization Rate Based on Cost 10.23% 10.54% 10.86% 11.18% 11.52% Capitalization Rate Based on Resale Price 10.00% 10.00% 10.00% 10.00% 10.00% Gross Rent Monthly Multiplier (GRM) Gross Rent Yearly Multiplier (GRM) Value of Property Using this GRM ,179,256 3,274,634 3,372,873 3,474,059 3,578,281 Break-Even Ratio 63.86% 63.02% 62.21% 61.42% 60.66% Operating Expense Ratio 36.98% 36.98% 36.98% 36.98% 36.98% Cash-on-Cash Return with Equity 30.33% 30.25% 27.90% 25.99% 24.40% Cash-on-Cash Return - Before Taxes 17.74% 18.77% 19.82% 20.91% 22.02% 7/17/2018 1:54 PM Cash Flow Analyzer

6 Rental Activity Analysis Potential Rental Income Less: Vacancy & Credit Losses Effective Gross Income Less: Operating Expenses Net Operating Income (NOI) Year 6 Year 7 Year 8 Year 9 Year 10 $ 614,272 $ 632,700 $ 651,681 $ 671,231 $ 691,368 (30,714) (31,635) (32,584) (33,562) (34,568) $ 583,558 $ 601,065 $ 619,097 $ 637,670 $ 656,800 (215,797) (222,270) (228,939) (235,807) (242,881) $ 367,761 $ 378,794 $ 390,158 $ 401,863 $ 413,919 Less: Annual Debt Service CASH FLOW Before Taxes (152,227) (152,227) (152,227) (152,227) (152,227) $ 215,534 $ 226,567 $ 237,931 $ 249,636 $ 261,691 Property Resale Analysis Projected Sales Price Less: Selling Expenses Adjusted Projected Sales Price $ 3,677,614 $ 3,787,942 $ 3,901,581 $ 4,018,628 $ 4,139, $ 3,677,614 $ 3,787,942 $ 3,901,581 $ 4,018,628 $ 4,139,187 Less: Mortgage(s) Balance Payoff SALE PROCEEDS Before Taxes (1,864,769) (1,804,409) (1,740,961) (1,674,268) (1,604,162) $ 1,812,845 $ 1,983,533 $ 2,160,619 $ 2,344,360 $ 2,535,025 Cash Position Cash Generated in Current Year Cash Generated in Previous Years Cash Generated from Property Sale Original Initial Investment Total Potential CASH Generated $ 215,534 $ 226,567 $ 237,931 $ 249,636 $ 261, ,103 1,138,637 1,365,204 1,603,135 1,852,771 1,812,845 1,983,533 2,160,619 2,344,360 2,535,025 (930,000) (930,000) (930,000) (930,000) (930,000) $ 2,021,483 $ 2,418,737 $ 2,833,754 $ 3,267,131 $ 3,719,487 Financial Measurements Debt Coverage Ratio (DCR) Loan-to-Value Ratio (LVR) Capitalization Rate Based on Cost Capitalization Rate Based on Resale Price % 47.6% 44.6% 41.7% 38.8% 11.86% 12.22% 12.59% 12.96% 13.35% 10.00% 10.00% 10.00% 10.00% 10.00% Gross Rent Monthly Multiplier (GRM) Gross Rent Yearly Multiplier (GRM) Value of Property Using this GRM 6.00 Break-Even Ratio Operating Expense Ratio ,685,629 3,796,198 3,910,084 4,027,386 4,148, % 59.19% 58.49% 57.81% 57.15% 36.98% 36.98% 36.98% 36.98% 36.98% Cash-on-Cash Return with Equity Cash-on-Cash Return - Before Taxes 23.06% 21.91% 20.92% 20.06% 19.30% 23.18% 24.36% 25.58% 26.84% 28.14% 7/17/2018 1:54 PM Cash Flow Analyzer

7 Expense Description Annual Amount Annual Increase Per Unit Per Sq Ft % of % of Expenses Revenue Cleaning Insurance Landscaping Payroll Professional Fees Supplies Property Taxes Trash Removal Electricity Water/Sewer Miscellaneous 2, % % 0.5% 3, % % 0.8% 6, % % 1.2% 28, % % 5.6% 2, % % 0.5% 31, % % 6.2% 26, % % 5.2% 7, % % 1.5% 36, % % 7.3% 31, % % 6.2% 10, % % 2.0% Total Annual Operating Expenses $ 186,148 $ 2,585 1, % 37.0%

8 Annual Property Operating Data 1 2 Year 1 Sq Ft Per Unit Year 2 Sq Ft Per Unit Year 3 Sq Ft Per Unit Year 4 Sq Ft Per Unit Year 5 Sq Ft Per Unit Potential Rental Income $ 529, $ 545, $ 562, $ 579, $ 596, Less: Vacancy & Credit Losses (26,494) (27,289) (28,107) (28,950) (29,819) Effective Gross Income $ 503, $ 518, $ 534, $ 550, $ 566, Operating Expenses Cleaning 2, , , , , Insurance 3, , , , , Landscaping 6, , , , , Payroll 28, , , , , Professional Fees 2, , , , , Supplies 31, , , , , Property Taxes 26, , , , , Trash Removal 7, , , , , Electricity 36, , , , , Water/Sewer 31, , , , , Miscellaneous 10, , , , , Total Operating Expenses $ 186, $ 191, $ 197, $ 203, $ 209, Net Operating Income (NOI) $ 317, $ 326, $ 336, $ 346, $ 357, Less: Annual Debt Service (152,227) (152,227) (152,227) (152,227) (152,227) Cash Flow Before Taxes $ 165, $ 174, $ 184, $ 194, $ 204, Cash Flow Analyzer

9 Annual Property Operating Data 1 2 Year 6 Sq Ft Per Unit Year 7 Sq Ft Per Unit Year 8 Sq Ft Per Unit Year 9 Sq Ft Per Unit Year 10 Sq Ft Per Unit Potential Rental Income Less: Vacancy & Credit Losses Effective Gross Income $ 614, $ 632, $ 651, $ 671, $ 691, (30,714) (31,635) (32,584) (33,562) (34,568) $ 583, $ 601, $ 619, $ 637, $ 656, Operating Expenses Cleaning Insurance Landscaping Payroll Professional Fees Supplies Property Taxes Trash Removal Electricity Water/Sewer Miscellaneous Total Operating Expenses 2, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , $ 215, $ 222, $ 228, $ 235, $ 242, Net Operating Income (NOI) $ 367, $ 378, $ 390, $ 401, $ 413, Less: Annual Debt Service Cash Flow Before Taxes (152,227) (152,227) (152,227) (152,227) (152,227) $ 215, $ 226, $ 237, $ 249, $ 261, Cash Flow Analyzer

10 Cash Flow After Taxes Cash Flow Before Taxes $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ Time Net Operating MIP Payments Debt Cash Flow Incomes Cash Flow Period Income Service Before Tax Taxes After Tax Int Investment $ (930,000) $ (930,000) Year 1 317,234 - (152,227) 165, ,007 Year 2 326,751 - (152,227) 174, ,524 Year 3 336,554 - (152,227) 184, ,327 Year 4 346,650 - (152,227) 194, ,423 Year 5 357,050 - (152,227) 204, ,823 Year 6 367,761 - (152,227) 215, ,534 Year 7 378,794 - (152,227) 226, ,567 Year 8 390,158 - (152,227) 237, ,931 Year 9 401,863 - (152,227) 249, ,636 Year ,919 - (152,227) 261, , Cash Flow Analyzer

11 After Taxes Before Taxes 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Time Initial Investment Cash Flow Cash on Cash Income Cash Flow Cash on Cash Period Adj for Refinance Before Taxes Before Taxes Taxes After Taxes After Taxes Year 1 $ 930,000 $ 165, % $ $ 165, % Year 2 930, , % - 174, % Year 3 930, , % - 184, % Year 4 930, , % - 194, % Year 5 930, , % - 204, % Year 6 930, , % - 215, % Year 7 930, , % - 226, % Year 8 930, , % - 237, % Year 9 930, , % - 249, % Year , , % - 261, % Cash Flow Analyzer

12 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Time Net Operating Cap Rate on Cost Resale Period Income (NOI) $ 3,100,000 Value Year 1 $ 317, % $ 3,172,342 Year 2 326, % 3,267,512 Year 3 336, % 3,365,538 Year 4 346, % 3,466,504 Year 5 357, % 3,570,499 Year 6 367, % 3,677,614 Year 7 378, % 3,787,942 Year 8 390, % 3,901,581 Year 9 401, % 4,018,628 Year , % 4,139, Cash Flow Analyzer

13 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $ Time Projected Adj Projected Refi Proceeds Mortgage(s) Sale Proceeds Income Taxes Sale Proceeds Property Year / Year Period Resale Value Increase (if any) Balance Payoff Before Taxes From Sale After Taxes Equity Equity Increase Year 1 $ 3,172, % $ $ (2,125,257) $ 1,047,085 $ $ 1,047,085 $ 1,047,085 $ 117,085 Year 2 3,267, % - (2,078,224) 1,189,288-1,189,288 1,189, ,203 Year 3 3,365, % - (2,028,785) 1,336,752-1,336,752 1,336, ,464 Year 4 3,466, % - (1,976,817) 1,489,686-1,489,686 1,489, ,934 Year 5 3,570, % - (1,922,190) 1,648,308-1,648,308 1,648, ,622 Year 6 3,677, % - (1,864,769) 1,812,845-1,812,845 1,812, ,537 Year 7 3,787, % - (1,804,409) 1,983,533-1,983,533 1,983, ,688 Year 8 3,901, % - (1,740,961) 2,160,619-2,160,619 2,160, ,086 Year 9 4,018, % - (1,674,268) 2,344,360-2,344,360 2,344, ,741 Year 10 4,139, % - (1,604,162) 2,535,025-2,535,025 2,535, , Cash Flow Analyzer

14 Return on Equity (ROE) 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Required Return on Equity Time Period Rental Annual Change Annual Change Trapped Return on Hold Cash Flow in Equity in Net Worth Equity Equity (ROE) Sell 6.00% A B (A + B) Year 1 165, , , , % Hold After Year Year 2 174, , ,727 1,047, % Hold 5 Year 3 184, , ,791 1,189, % Hold Year 4 194, , ,357 1,336, % Hold Year 5 204, , ,445 1,489, % Hold Year 6 215, , ,071 1,648, % Hold Year 7 226, , ,255 1,812, % Hold Year 8 237, , ,017 1,983, % Hold Year 9 249, , ,377 2,160, % Hold Year , , ,356 2,344, % Hold Cash Flow Analyzer

15 BreakEven Occupancy BreakEven Occupancy with Cash on Cash Requirment 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Cash on Cash Time Period Potential Operating, Debt, Occupancy BreakEven Max Vacancy BreakEven Max Vacancy Requirement Rental Income Reserve Expenses Rate (Existing) Occupancy Rate BreakEven Rate Occupancy Rate BreakEven Rate 6.00% w/ Cash on Cash w/ Cash on Cash Year 1 529,876 (338,375) 95.00% 63.86% 36.14% 74.39% 25.61% Year 2 545,772 (343,960) 95.00% 63.02% 36.98% 73.25% 26.75% Year 3 562,145 (349,712) 95.00% 62.21% 37.79% 72.14% 27.86% Year 4 579,010 (355,636) 95.00% 61.42% 38.58% 71.06% 28.94% Year 5 596,380 (361,738) 95.00% 60.66% 39.34% 70.01% 29.99% Year 6 614,272 (368,024) 95.00% 59.91% 40.09% 69.00% 31.00% Year 7 632,700 (374,498) 95.00% 59.19% 40.81% 68.01% 31.99% Year 8 651,681 (381,166) 95.00% 58.49% 41.51% 67.05% 32.95% Year 9 671,231 (388,034) 95.00% 57.81% 42.19% 66.12% 33.88% Year ,368 (395,108) 95.00% 57.15% 42.85% 65.22% 34.78% Cash Flow Analyzer

16 CRES Corp International, LLC CRES Corp International, LLC 1228 E 7th Ave 0 Tampa, Fl benny@crescorpllc.com Commercial Real Estate Services - Financial Services Management & Leasing Services CRES Corp International, LLC (CCI) is a Commercial Real Estate firm offering brokerage, finance and management services. Our unique business model brings to our property owners and investors the means to get transactions completed where all parties are satisfied. CRES Corp International offers the Preferred Investor Program (PIP), where our Clients receive the following benefits: Property Owners No Exclusive Listing Agreement Property introduced only to Pre-Qualified Investors who: Have Sufficient Funds for RE Purchases Have Experience in Investing Make Reasonable Offers Investors Receive Information on Off-Market Property Receive information on Pre-Listed Property Minimal Competition Great Price on their RE Purchases CRES Corp International specializes in the following commercial property: Apartments Hotels MHP/RV Office Buildings/Complexes Medical Offices & Centers Vacant Land (Development) For further information contact or benny@crescorpllc.com

17 Terms & Definitions Net Operating Income (NOI) is a property s gross rental income reduced by all expenses except for loan payments, income taxes, mortgage insurance premium (MIP) payments and sometimes funded reserves. Debt Coverage Ratio (DCR) is a property s net operating income divided by the amount of debt payments. Lenders use this calculation to determine the remaining operating cash flow after the debt payments. Loan-to-Value Ratio (LTV) is the outstanding debt divided by the value of the property. This ratio is used to determine the amount of leverage and property equity. The debt balance can be the beginning or end-of-year balance. The property value used can be the contract price or the fair market value at the end of the year. Capitalization Rate (Cap Rate) is the net operating income (NOI) divided by either the property s contract purchase price or its fair market value. Cash-on-Cash Return is the net cash flow divided it by the initial investment (down payment). The calculation does not take into account the time value of money or change in the property s equity. Cash-on-Cash Return with Equity Build-up modifies the cash-on-cash return calculation by adding the property s net change in equity for that year to the numerator and adding all previously generated equity to the denominator of the cash-on-cash return ratio. The calculation calculates the return on the property equity, i.e. the return on the cash that is tied up in the property. Net Present Value (NPV) converts future dollars into present-day dollars by discounting (reducing) the future cash flow of a property by a given rate or percentage. The initial investment (down payment) is subtracted from the discounted dollars to derive the NPV. A positive NPV means that the property will generate a higher return than the given rate or percentage used to calculate the NPV amount. Gross Rent Multiplier (GRM) is a property s fair market value divided by its gross rental income. Mortgage Insurance Premium (MIP) Payments are insurance premiums charged by a lender to protect that lender against loss from a mortgager's default. The rates are charged on the balance of the loan and may be paid annually, monthly, or in some combination of the two (split premiums). Internal Rate-of-Return (IRR) is the most widely used method of valuing a property s annual cash flow stream. Since a property s cash flow is earned in the future, those future dollars must be converted to present-day dollars. The IRR calculation discounts (reduces) the property s future cash flow at a rate (i.e. percentage) so that the sum of all cash flow for a specified time period is equal to the initial investment. The rate or percentage needed to do that is the IRR. In other words, IRR is the discount rate at which Net Present Value (NPV) is zero. Modified Internal Rate-of-Return (MIRR) modifies the IRR to avoid the drawbacks of the traditional IRR. The IRR implicitly assumes that all cash flow is either reinvested or discounted at the computed IRR rate. In reality, a property s cash flow probably will not be reinvested at the computed IRR rate, but rather earn zero or a small amount of interest. The MIRR eliminates the reinvestment assumption by utilizing user stipulated reinvestment and borrowing rates. benny@crescorpllc.com CRES Corp International, LLC 1228 E 7th Ave 0 Tampa, Fl 33605