Financial Analysis Preview - Apartment Community

Financial Analysis for Management Plan
Prepared For: Sample
Prepared By: myHomeSpot.com
Prepared Date:
Section: Overview
Financial Analysis Overview
The following assumptions are made in this analysis:
Expenses
1. A 15% reduction in variable expenses
2. A 40 % reduction in water expense
3. A 25% reduction in payroll expense
4. A loan modification is executed decreasing the interest rate by 50 basis points
5. A 50% reduction in accounting expenses
6. The elimination of the existing management fee (Approximately $2,847 per mo.)
7. Addition of myHomeSpot.com, LLC management fees (Variable, see "Statement ‐ Projected" section)
8. A reduction in travel expense to $0
Revenues
1. The market rate for each unit is $550 per month
2. The average days on the market for each unit is 30 days
3. Late fees will increase to $1,350 per month
4. Turnover ratio increases from 1.3 to 1.75
5. Default ratio decreases from 8% to 6%
6. Rate of rent increase goes from 1% to 1.5%
Sensitivity Analysis:
Under the best case scenario forecasted revenues will be 3% higher and expenses will be 3% lower than projected.
Under the expected scenario forecasted revenues will be 0% higher and expenses will be 0% lower than projected.
Under the best case scenario forecasted revenues will be 3% lower and expenses will be 3% higher than projected.
*Sensitivity analysis changes are not reflected in the "Statement ‐ Projected" section. Changes are reflected in the "Investment
Analysis" section.
Prepared Date:
Section: Investor & Property Information
General Property Information Acquisition & Financing Information Disposition & Market Assumptions

Name Sample Apartments Purchase Price $ 1,300,000 Selling Expense 3.00%
Address 1234 Peachtree St Closing Cost $ 12,000 Annual Rate of Rent Increase 0.00%
City, State Zip Atlanta, GA 30342 Original Loan Amount $ 700,000 Inflation Adjustment Rate 3.00%
Current Manager Self Managed Initial Investment $ 612,000 Disposition Cap Rate 8.00%
Date of Analysis 1/1/2010 Date of Acquisition 2/1/2008
On Site Staff ‐ (Y or N) Yes Date of Loan Procurement 2/1/2008 Investor Objectives
If yes list title of staff below: Type (Interest Only or Amortized) Interest Only Reinvestment Rate 3.5%
Staff Member #1 N/A Rate 7.00% Discount Rate 12%
Staff Member #2 N/A Amortization Period 240
Staff Member #3 N/A Term (Mo.) 120
Property Statistics
p y Additional Leverage ($)
g ($) $
$ 50,000
,
Property Type Garden Style Type (Interest Only or Amortized) Interest Only
Property Age 1981 Date of Loan Procurement 1/1/2008
Number of Buildings 8 Rate 9.00%
Number of Units 32 Amortization Period 120
Parking Type Lot Term (Mo.) 120
Features & Amenities 1031 Exchange (Y or N) Y
Pool No Original Basis $ 700,000
Count: 0 Investor Tax Rate 35%
Tennis No Percent Depreciable 75%
Count: 0 Commercial or Residential Commercial
Club House No
Count: 0
Fitness Center No
Count: 0
Pond/Water Feature No
Count: 0
Prepared Date:
Section: Revenues
Occupied Unit Information Additional Sources of Rev. (mo.)
Unit Type Rent Rate # in Community % of Total Parking Income $ ‐
1 Bed 1 Bath $ 500 7 29.2% Late charges $ 325.00
2 Bed 1 Bath $ 575 9 37.5% Deposit Forfeit $ ‐
2 Bed 2 Bath $ 600 4 16.7% Application $ 75.00
3 Bed 2 Bath $ 650 4 16.7% Utility Contracts $ ‐
N/A $ ‐ 0 0.0% Other $ ‐
N/A $ ‐ 0 0.0% Other $ ‐
N/A $ ‐ 0 0.0% Total $ 400.00
N/A $ ‐ 0 0.0%
N/A $ ‐ 0 0.0% Unit Statistics
N/A $ ‐ 0 0.0% Default Ratio (Yr.) 5%
Totals $ 569.79 24 100.0% Average Tenant Tenure (Yrs.) 1.5
Total Units 32
Vacant Unit Information Total Potential Rent $ 18,325.00
Unit Type Rent Rate # in Community % of Total Current Gross Collected Rent $ 13,675.00
1 Bed 1 Bath $ 500 2 25.0% Current Vacancy Rate 25.0%
2B d1B h
2 Bed 1 Bath $
$ 575 2 25
25.0%
0% C
Current Vacancy (Economic)
V (E i ) 25.4%
25 4%
2 Bed 2 Bath $ 600 2 25.0% Average Rent Rate $ 573
3 Bed 2 Bath $ 650 2 25.0% % Rev (Non‐Rent Sources) 2.1%
N/A $ ‐ 0 0.0%
N/A $ ‐ 0 0.0%
N/A $ ‐ 0 0.0%
N/A $ ‐ 0 0.0%
N/A $ ‐ 0 0.0%
N/A $ ‐ 0 0.0%
Totals $ 581.25 8 100.0%
Prepared Date:
Section: Expenses
Expense Information Reserve Budgeting
Finance Management Category Quantity Cost Expected Life Reserve (mo.)
Primary Note Payment $ 4,083 Operational Mgmt 7% Refrigerators 32 $ 350 10 $ 93
Second Note $ 375 Leasing Mgmt 75% Stoves 32 $ 300 10 $ 80
Government Renewal Mgmt 25% HVAC 0 $ 300 12 $ ‐
Property Taxes $ 1,000 Personnel Carpeting 32 $ 450 5 $ 240
Assessments/Fees $ 100 N/A $ ‐ Roof (SF) 10,000 $ 10.50 25 $ 350
Operating N/A $ ‐ Parking Area (SF) 17,000 $ 3.50 20 $ 248
Property Insurance $ 750 N/A $ ‐ Water Heaters 32 $ 350 15 $ 62
Advertising $ 50 CAM Exterior Paint 8 $ 350 5 $ 47
Legal $ 220 Pool $ ‐ Pool 0 $ ‐ 0 $ ‐
Accounting $ 350 Tennis $ ‐ Fitness Equipment 0 $ ‐ 0 $ ‐
Utilities $ 115 Club House $ ‐ Other 0 $ ‐ 0 $ ‐
Maintenance & Repairs $ 1,100 Fitness Center $ ‐ Other 0 $ ‐ 0 $ ‐
Turnover (Per Unit) Pond/Water Feature $ ‐ Total Reserve $ 1,120.14
Paint $ 400.00 Reserves Contingency 3.0%
Cleaning $ 50.00 Reserve Account $ 1,153.74 Adjusted Total $ 1,153.74
Carpet Clean $ 35.00 Misc.
Misc. #1 $ ‐
Prepared Date:
Section: Projections
Expense Information Adjustments to Financing
Finance Adjustment Management: Adjustment Total Loans Outstanding $ 724,913
Primary Note Payment $ 4,083 $ 4,078 Operational Mgmt 7% 7% New Loan Amount $ 724,913
Second Note $ 375 $ 530 Leasing Mgmt 75% 75% Refinance Date 5/1/2009
Net Change: $ 150 Renewal Mgmt 25% 25% Interest Only (Y o N) Y
Government Net Change: N/A Rate 6.75%
Property Taxes $ 1,000 $ 1,000 Personnel Amortization Period 240
Special Assessments $ 100 $ 100 N/A $ ‐ $ ‐ Term (Mo.) 120
Net Change: $ ‐ N/A $ ‐ $ ‐ Cost 1.0%
Operating N/A $ ‐ $ ‐ Additional Leverage ($) $ 50,000
Property Insurance $ 750 $ 700 Net Change: $ ‐ Interest Only (Y o N) n
Advertising
Advertising $
$ 50 $
$ 50 CAM Rate 5 00%
5.00%
Legal $ 220 $ 220 Pool $ ‐ $ ‐ Refinance Date 5/1/2009
Accounting $ 350 $ 350 Tennis $ ‐ $ ‐ Amortization Period 120
Utilities $ 115 $ 115 Club House $ ‐ $ ‐ Term (Mo.) 120
Maintenance & Repairs $ 1,100 $ 1,000 Fitness Center $ ‐ $ ‐ Cost 1.0%
Net Change: $ (150) Pond/Water Feature $ ‐ $ ‐
Turnover Net Change: $ ‐ Adjustment to Additional Rev.
Paint (per Unit) $ 400.00 $ 375.00 Reserves Parking Income $ ‐
Cleaning (per Unit) $ 50.00 $ 45.00 Total $ 1,153.74 $ 1,153.74 Late charges $ 325.00
Carpet Clean (per Unit) $ 35.00 $ 35.00 Misc. Deposit Forfeit $ ‐
Net Change: $ (30.00) Misc. #1 $ ‐ Application $ 75.00
Cap Improvement & Refi $ 9,649 Utility Contracts $ ‐
Other $ ‐
Other $ ‐
Total $ 400.00
Prepared Date:
Section: Projections
Expense Information
Finance Adjustment Management: Adjustment
Primary Note Payment $ 4,083 $ 4,078 Operational Mgmt 7% 7%
Second Note $ 375 $ 530 Leasing Mgmt 75% 75%
Net Change: $ 150 Renewal Mgmt 25% 25%
Government Net Change: N/A
Property Taxes $ 1,000 $ 1,000 Personnel
Special Assessments $ 100 $ 100 N/A $ ‐ $ ‐
Net Change: $ ‐ N/A $ ‐ $ ‐
Operating N/A $ ‐ $ ‐
Property Insurance $ 750 $ 700 Net Change: $ ‐
Advertising $ 50 $ 50 CAM
Legal $ 220 $ 220 Pool $ ‐ $ ‐
Accounting $ 350 $ 350 Tennis $ ‐ $ ‐
Utilities $ 115 $ 115 Club House $ ‐ $ ‐
Maintenance & Repairs $ 1,100 $ 1,000 Fitness Center $ ‐ $ ‐
Net Change: $ (150) Pond/Water Feature $ ‐ $ ‐
Turnover Net Change: $ ‐
Paint (per Unit) $ 400.00 $ 375.00 Reserves
Cleaning (per Unit) $ 50.00 $ 45.00 Total $ 1,153.74 $ 1,153.74
Carpet Clean (per Unit) $ 35.00 $ 35.00 Misc.
Net Change: $ (30.00) Misc. #1 $ ‐
Cap Improvement & Refi $ 9,649
Prepared Date:
Section: Projections continued
Adjustments to Financing Property Performance/Rent Rate Adjustment
Total Loans Outstanding $ 724,913 Current Potential
New Loan Amount $ 724,913 Average Tenant Tenure 1.5 1.8
Refinance Date 5/1/2009 Defalut Rate 5.0% 3%
Interest Only (Y o N) Y Vacancy (Economic) 25.4% 20%
Rate 6.75% Stabalized Vacancy (Economic) 89%
Amortization Period 240 Rate of Rent Increase 0.00% 0.5%
Term (Mo.) 120 Unit Type Current Rate Potential Rate
Cost 1.0% 1 Bed 1 Bath $ 500 $ 550.00
Additional Leverage ($) $ 50,000 2 Bed 1 Bath $ 575 $ 620.00
Interest Only (Y o N) n 2 Bed 2 Bath $ 600 $ 640.00
Rate 5.00% 3 Bed 2 Bath $ 650 $ 685.00
Refinance Date 5/1/2009 N/A $ ‐
Amortization Period 120 N/A $ ‐
Term (Mo.) 120 N/A $ ‐
Cost 1.0% N/A $ ‐
N/A $ ‐
Adjustment to Additional Rev.
d dd l N/A $ ‐
Parking Income $ ‐
Late charges $ 325.00 Cap Improvement & Additional Cost
Deposit Forfeit $ ‐ Cap Improvement #1 $ 1,000.00
Application $ 75.00 Cap Improvement #2 $ 900.00
Utility Contracts $ ‐ Cap Improvement #3 $ ‐
Other $ ‐ Cap Improvement #4 $ ‐
Other $ ‐ Cap Improvement #5 $ ‐
Total $ 400.00 Total $ 1,900.0
Cost to Adjust Financing $ 7,749.1
Adjusted Total $ 9,649.1
Prepared Date:
Section: Statement ‐ Current
Year 1 Year 2 Year 3 Year 4 Year 5

Revenues
Potential Rental Income $ 219,900.00 $ 219,900.00 $ 219,900.00 $ 219,900.00 $ 219,900.00
Other Income $ 4,800.00 $ 4,800.00 $ 4,800.00 $ 4,800.00 $ 4,800.00
Vacancy (% of Total $) $ 55,800.00 $ 55,800.00 $ 55,800.00 $ 55,800.00 $ 55,800.00
Tenant Default $ 8,205 $ 8,205 $ 8,205 $ 8,205 $ 8,205
Gross Operating Income $ 160,695.00 $ 160,695.00 $ 160,695.00 $ 160,695.00 $ 160,695.00
Expenses
Government
Property Taxes $ 12,000 $ 12,360 $ 12,731 $ 13,113 $ 13,506
Assessments/Fees $ 1,200 $ 1,236 $ 1,273 $ 1,311 $ 1,351
Operating
Property Insurance $ 9,000 $ 9,270 $ 9,548 $ 9,835 $ 10,130
Advertising $ 600 $ 618 $ 637 $ 656 $ 675
Legal $ 2,640 $ 2,719 $ 2,801 $ 2,885 $ 2,971
Accounting $ 4,200 $ 4,326 $ 4,456 $ 4,589 $ 4,727
Utilities $ 1,380 $ 1,421 $ 1,464 $ 1,508 $ 1,553
Maintenance & Repairs $ 13,200 $ 13,596 $ 14,004 $ 14,424 $ 14,857
Turnover
Paint $ 6,400 $ 6,592 $ 6,790 $ 6,993 $ 7,203
Cleaning $ 800 $ 824 $ 849 $ 874 $ 900
Carpet Clean $ 560 $ 577 $ 594 $ 612 $ 630
Management
Operations $ 11,487 $ 11,487 $ 11,487 $ 11,487 $ 11,487
Leasing $ 9,163 $ 9,163 $ 9,163 $ 9,163 $ 9,163
Renewals $ 1,527 $ 1,527 $ 1,527 $ 1,527 $ 1,527
Personnel
N/A $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
N/A $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
N/A $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
CAM
Pool $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
Tennis $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
Club House $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
Fitness Center $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
Pond/Water Feature $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
Misc.
Misc. #1 $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
Total Operating Expense $ 74,157 $ 75,716 $ 77,322 $ 78,977 $ 80,681
Net Operating Income $ 86,538 $ 84,979 $ 83,373 $ 81,718 $ 80,014

Prepared Date:
Section: Statement ‐ Current Continued
Less:
1st Mtg. $ 49,000 $ 49,000 $ 49,000 $ 49,000 $ 49,000
2nd Mtg. $ 4,500 $ 4,500 $ 4,500 $ 4,500 $ 4,500
Less:
Reserve Account $ 13,845 $ 14,260 $ 14,260 $ 14,260 $ 14,260
Before Tax Cash Flow $ 19,194 $ 17,219 $ 15,613 $ 13,958 $ 12,254
Add:
Mortgage Principal $ 19,884 $ 21,391 $ 23,014 $ 24,761 $ 26,642
Less:
Depreciation Exp. $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Interest Exp. $ 52,841 $ 51,334 $ 49,414 $ 47,965 $ 46,084
Taxable Income $ (38,763) $ (37,724) $ (35,788) $ (34,246) $ (32,188)
Tax Liability (Savings) @
35% $ (13,567) $ (13,203) $ (12,526) $ (11,986) $ (11,266)
After Tax Cash Flow $ 32,761 $ 30,422 $ 28,138 $ 25,944 $ 23,520
Prepared Date:
Section: Statement ‐ Potential
Year 1 Year 2 Year 3 Year 4 Year 5

Revenues
Potential Rental Income $ 236,640.00 $ 237,823.20 $ 239,012.32 $ 240,207.38 $ 241,408.41
Other Income $ 4,800.00 $ 4,800.00 $ 4,800.00 $ 4,800.00 $ 4,800.00
Vacancy (% of Total $) $ 189,312.00 $ 26,160.55 $ 26,291.35 $ 26,422.81 $ 26,554.93
Tenant Default $ 1,420 $ 6,350 $ 6,382 $ 6,414 $ 6,446
Gross Operating Income $ 50,708.16 $ 210,112.77 $ 211,139.33 $ 212,171.03 $ 213,207.88
Expenses
Government
Property Taxes $ 12,000 $ 12,360 $ 12,731 $ 13,113 $ 13,506
Assessments/Fees $ 1,200 $ 1,236 $ 1,273 $ 1,311 $ 1,351
Operating
Property Insurance $ 8,400 $ 8,652 $ 8,912 $ 9,179 $ 9,454
Advertising $ 600 $ 618 $ 637 $ 656 $ 675
Legal $ 2,640 $ 2,719 $ 2,801 $ 2,885 $ 2,971
Accounting $ 4,200 $ 4,326 $ 4,456 $ 4,589 $ 4,727
Utilities $ 1,380 $ 1,421 $ 1,464 $ 1,508 $ 1,553
Maintenance & Repairs $ 12,000 $ 12,360 $ 12,731 $ 13,113 $ 13,506
Turnover
Paint $ 1,333 $ 6,111 $ 6,295 $ 6,484 $ 6,678
Cleaning $ 160 $ 733 $ 755 $ 778 $ 801
Carpet Clean $ 124 $ 570 $ 588 $ 605 $ 623
Management
Operational Mgmt $ 3,313 $ 14,816 $ 14,890 $ 14,965 $ 15,040
Leasing Mgmt $ 8,217 $ 8,258 $ 8,299 $ 8,341 $ 8,382
Renewal Mgmt $ 2,191 $ 2,202 $ 2,213 $ 2,224 $ 2,235
Personnel
N/A $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
N/A $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
N/A $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
CAM
Pool $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
Tennis $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
Club House $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
Fitness Center $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
Pond/Water Feature $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
Misc.
Misc. #1 $ ‐ $ ‐ $ ‐ $ ‐ $ ‐
Total Operating Expense $ 57,758.52 $ 76,383.89 $ 78,043.50 $ 79,749.74 $ 81,503.99
Net Operating Income $ (7,050.36) $ 133,728.88 $ 133,095.83 $ 132,421.29 $ 131,703.89

Prepared Date:
Section: Statement ‐ Potential Continued
Less:
Capital Improvements $ 1,900.00 $ ‐ $ ‐ $ - $ ‐
Cost to Refinance $ 7,749.13 $ ‐ $ ‐ $ - $ ‐
Less:
1st Mtg. $ 48,931.66 $ 48,931.66 $ 48,931.66 $ 48,931.66 $ 48,931.66
2nd Mtg. $ 6,363.96 $ 6,363.96 $ 6,363.96 $ 6,363.96 $ 6,363.96
Less:
Reserve Account $ 13,844.92 $ 13,844.92 $ 13,844.92 $ 13,844.92 $ 13,844.92
Before Tax Cash Flow $ (85,840.03) $ 64,588.35 $ 63,955.30 $ 63,280.76 $ 62,563.36
Add:
Mortgage Principal $ 17,754.71 $ 18,990.94 $ 20,313.24 $ 21,727.61 $ 23,240.47
Less:
Depreciation Exp. $ 25,000.00 $ 25,000.00 $ 25,000.00 $ 25,000.00 $ 25,000.00
Interest Exp. $ 48,389.05 $ 47,152.82 $ 45,830.52 $ 44,416.15 $ 42,903.29
Taxable Income $ (141,474.37) $ 11,426.47 $ 13,438.02 $ 15,592.22 $ 17,900.54
Tax Liability (Savings) @
35% $ (49,516.03) $ 3,999.26 $ 4,703.31 $ 5,457.28 $ 6,265.19
After Tax Cash Flow $ (36,324.00) $ 60,589.08 $ 59,251.99 $ 57,823.48 $ 56,298.17
Prepared Date:
Section: Investment Analysis
Analysis Period ‐ (1 ‐ 5) 4
Projected Disposition Date 12/31/2013
Sensitivity Analysis Ratio/Multiplier Analysis
Revenue Expense Current Potential
% Different than Forcasted 0% 0% Ratio Analysis
Debt coverage ratio 1.53 2.39
Project Summary Default Ratio 0.82 0.64
Current Potential Operating expense ratio 0.49 0.38
Gross Operating Income $ 160,695.00 $ 212,171.03 Multipliers
Total Operating Expense $ 78,976.53 $ 79,749.74 Gross income multiplier 8.09 6.13
Net Operating Income $ 81,718.47 $ 132,421.29 Net income multiplier 15.91 9.82
Total Debt Service $ 53,500.00 $ 55,295.62
Loan Balance @ Disposition $ 610,566.42 $ 662,903.31 Valuation
Before Tax Cash Flow $ 13,958.20 $ 63,280.76 Direct Capitalization Method Current Potential
After Tax Cash Flow $ 25,944.39 $ 57,823.48 Property Cap Rate 6.29% 10.19%
Disposition Summary
p y @ p p $
Value @ Disposition Cap $ 1,021,480.84
, , $ 1,655,266.13
$ , ,
Current Potential Discounted Cash Flow Method
BTCF @ Disposition $ 380,270 $ 942,705 Before Tax NPV $ (319,570) $ 47,462
ATCF @ Disposition $ 243,477 $ 590,742 After Tax NPV $ (367,313) $ (141,937)
Rate of Return Analysis
Current Potential
Avg. Rate of Return (BTCF) 18.23% 42.84%
Avg. Rate of Return (ATCF) 14.74% 29.91%
Internal Rate of Return (BTCF) ‐8.01% 14.04%
Internal Rate of Return (ATCF) ‐13.84% 4.69%
Capital Accumulation
Current Potential
Capital Accumulated N/A N/A
Annual Growth rate of Capital N/A N/A

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Financial Analysis for Management Plan

General Property Information Acquisition & Financing Information Disposition & Market Assumptions

Year 1 Year 2 Year 3 Year 4 Year 5

Net Operating Income $ 86,538 $ 84,979 $ 83,373 $ 81,718 $ 80,014

Year 1 Year 2 Year 3 Year 4 Year 5

Net Operating Income $ (7,050.36) $ 133,728.88 $ 133,095.83 $ 132,421.29 $ 131,703.89

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