Laredo Deal Analysis

Let's look at deal analysis for Laredo, TX and for 06 Buy 10 Nomads™ with 10% Discounts.

The World's Greatest Real Estate Deal Analysis Spreadsheet™

The analysis is based on The World's Greatest Real Estate Deal Analysis Spreadsheet™ (shown above)... a free spreadsheet download you can use to analyze your own deals.

Typical Laredo, Texas Nomad™ Property with 10% Discount

Typical Laredo, Texas Nomad™ Property with 10% Discount
Purchase Inputs
Percents Dollars/#
ARV $171,099
Purchase Price $153,989
Seller Concessions $0
Down Payment 5.000% $7,699
Closing Costs 1.000% $1,540
Rent Ready Costs $0
Cumulative Negative Cash Flow $12,093
Total Invested $21,332
Mortgage
Mortgage Amount $146,289.55
Mortgage Interest Rate 6.500%
Loan Term 360
Private Mortgage Insurance 0.850% $103.62
Drop PMI LTV 80.000%
Income
Monthly Rent $1,496 $1496.25
Other Income $0
Annual Expenses
Vacancy Rate 3.000% $539
Property Taxes 2.587% $4,426
Property Insurance 1.419% $2,428
HOA Dues $0
Utilities $0
Other Expenses 1 $0
Other Expenses 2 $0
Maintenance 10.000%
CapEx $0
Management 0.000%
Depreciation Details
Land Value 15.000% $23,098
Property Type (C or R) R 27.5
Effective Income Tax Rate 15.000%
Property Value 1 2 3 4 5
ARV at End of Year $176,232 $181,519 $186,964 $192,573 $198,351
Appreciation Rate 3.000% 3.000% 3.000% 3.000% 3.000%
Appreciation Dollar $5,133 $5,287 $5,446 $5,609 $5,777
Monthly Income 1 2 3 4 5
Rent Appreciation Rate 3.000% 3.000% 3.000% 3.000%
Monthly Rent $1,496 $1,541 $1,587 $1,635 $1,684
Monthly Other Income Appreciation Rate 3.000% 3.000% 3.000% 3.000%
Monthly Other Income $0 $0 $0 $0 $0
Monthly Gross Potential Income $1,496 $1,541 $1,587 $1,635 $1,684
Vacancy Percent 3.000% 3.000% 3.000% 3.000% 3.000%
Monthly Vacancy Dollar $45 $46 $48 $49 $51
Monthly Gross Operating Income $1,451 $1,495 $1,540 $1,586 $1,634
Annual Income 1 2 3 4 5
Annual Rent $17,955 $18,494 $19,048 $19,620 $20,209
Annual Other Income $0 $0 $0 $0 $0
Annual Gross Potential Income $17,955 $18,494 $19,048 $19,620 $20,209
Annual Vacancy Dollar $539 $555 $571 $589 $606
Annual Gross Operating Income $17,416 $17,939 $18,477 $19,031 $19,602
Annual Expenses 1 2 3 4 5
Property Taxes Percent 2.587% 2.587% 2.587% 2.587% 2.587%
Property Taxes Dollar $4,426 $4,559 $4,696 $4,837 $4,982
Insurance Percent 1.419% 1.419% 1.419% 1.419% 1.419%
Insurance Dollar $2,428 $2,501 $2,576 $2,653 $2,733
HOA Appreciation Rate 3.000% 3.000% 3.000% 3.000% 3.000%
HOA Dues Dollar $0 $0 $0 $0 $0
Utilities Appreciation Rate 3.000% 3.000% 3.000% 3.000% 3.000%
Utilities Dollar $0 $0 $0 $0 $0
Other Expense 1 Appreciation Rate 3.000% 3.000% 3.000% 3.000% 3.000%
Other Expense 1 Dollar $0 $0 $0 $0 $0
Other Expense 2 Appreciation Rate 3.000% 3.000% 3.000% 3.000% 3.000%
Other Expense 2 Dollar $0 $0 $0 $0 $0
Maintenance Percent 10.000% 10.000% 10.000% 10.000% 10.000%
Maintenance Dollar $1,742 $1,794 $1,848 $1,903 $1,960
CapEx Appreciation Rate 3.000% 3.000% 3.000% 3.000% 3.000%
CapEx Dollar $0 $0 $0 $0 $0
Property Management Percent 0.000% 0.000% 0.000% 0.000% 0.000%
Property Management Dollar $0 $0 $0 $0 $0
Annual Operating Expenses $8,596 $8,854 $9,119 $9,393 $9,675
Net Operating Income 1 2 3 4 5
Net Operating Income (NOI) $8,820 $9,085 $9,358 $9,638 $9,928
Mortgage 1 2 3 4 5
Total Annual P&I Payments $11,096 $11,096 $11,096 $11,096 $11,096
Principal $1,635 $1,745 $1,861 $1,986 $2,119
Interest $9,461 $9,351 $9,234 $9,110 $8,977
Loan Balance at End of Year $144,654 $142,910 $141,048 $139,062 $136,943
Loan-To-Value 82.082% 78.730% 75.441% 72.213% 69.041%
Private Mortgage Insurance (PMI) Rate 0.850%
Private Mortgage Insurance Dollar $1,243 $0 $0 $0 $0
Equity 1 2 3 4 5
ARV - Loan Balance at End of Year $31,578 $38,609 $45,916 $53,511 $61,408
Cash Flow 1 2 3 4 5
Annual Cash Flow -$3,519 -$2,011 -$1,738 -$1,457 -$1,168
Monhtly Cash Flow -$293 -$168 -$145 -$121 -$97
Cash on Cash Return on Investment -0.165% -0.094% -0.081% -0.068% -0.055%
Cap Rate
DSCR 0.00 0.00 0.00 0.00 0.00
Negative Cash Flow $0 $0 $0 $0 $0
Cumulative Negative Cash Flow $0 $0 $0 $0 $0

Appreciation

Organic Appreciation $7,834
+ Forced Appreciation + $0
Total Appreciation = $7,834

Let's walk through calculating Appreciation for Typical 25% Down Payment Gainesville, Florida Rental Property.

First, there's organic appreciation and forced appreciation.

Organic Appreciation

Organic appreciation is the tendency that properties become more expensive over time. Some would argue that, at least part of it, is from inflation.

Ultimately, to calculate the organic appreciation we will need the current value of the property and Appreciation Rate.

Both the current value of a property and the appreciation rate are easy since they both are primary inputs that do not require any real calculation.

Organic Appreciation

Property Value $261,142
× Appreciation Rate × 3%
Appreciation = $7,834

That means that we're estimating Typical 25% Down Payment Gainesville, Florida Rental Property will naturally and organically appreciate $7,834.26 over a full year.

Forced Appreciation

Forced appreciation from buying a property at a discount and/or improving the property to add value.

To calculate forced appreciation—especially on a new purchase—we will take the difference between the Purchase Price and the After Repair Value of the property.

Forced Appreciation

After Repair Value $261,142
- Purchase Price - $261,142
Forced Appreciation = $0

That means that we're estimating Typical 25% Down Payment Gainesville, Florida Rental Property was forced to appreciate $0 by buying at a discount and/or improving the property in the next year.

It is not uncommon to have zero or even negative forced appreciation on a property when acquiring it. In fact, sometimes we deliberately trade the short-term benefit of buying a property at a discount to select a property that is likely to see better than average organic appreciation in the long-term. Think of this as: selecting a high quality, in-demand property that is likely to continue to increase in demand in the future and grow faster than inflation and other properties in different areas or with different characteristics.

Total Appreciation

The total appreciation is the sum of the estimated organic appreciation and the estimated forced appreciation over the next year.

Total Appreciation

Organic Appreciation $7,834
+ Forced Appreciation + $0
Total Appreciation = $7,834

For Typical 25% Down Payment Gainesville, Florida Rental Property we're estimating the organic appreciation of $7,834.26 plus the forced appreciation of $0 gives us an estimated total appreciation of $7,834.26 in the next year.