1. Washington Terrace Utah (Wash) Palmdale California (Palm)
Property Analysis
Washington Terrace Utah (Wash)
Palmdale California (Palm)

2. Wash Property Overview
Price
$1,398,700
No. Units 20
Building Size
16268 SF
Price/Unit
$69,935
Property Type
Multifamily
Property Sub-type
Garden/Low Rise
Property Use Type:
Investment
Cap Rate Pro Forma
6.90%
Cap Rate Actual
4.40%
Occupancy
100%
No. Stories 2
Lot Size
0.85 AC
383 West 4900 South, Washington Terrace, UT 84405

4. Wash Background Market Data

5. Cap Rates for Ogden Utah
Cap Rate = NOI/Price
TOP SEVEN CAP RATE FACTORS
ΠLocal economy, job growth, unemployment
 Interest rates
Ž Availability of financing
 Property income growth
 Supply/demand
‘ National economic conditions/GDP growth
’ Risk premium of private real estate
Source: Integra Realty Resources, Inc. (IRR.com)

6. Vacancy Rate for the Area
Source: Integra Realty Resources, Inc. (IRR.com)

7. Comparisons Properties with 5+ units are valued by Cap Rates not Comps
Asking
# Units
Price/Unit
Sq. Ft.
Price/SF
Lot Size
Year Built A
$1,300,000 10
$130,000
16,800
$77.38
.62 AC
2006 B
$1,200,000 20
$60,000
17,030
$70.46
1.22 AC
1967
Subject
$1,398,700
$69,935
16,268
$85.98
.85 AC
1971
Average
$86,645.00
$73.92
Median
$69,935.00
Suggested
$1,202,570
Properties with 5+ units are valued by Cap Rates not Comps

8. Approach to Forced Appreciation
Invest to increase Rents
Survey area for properties renting at $575-$650 Rents
Upgrade outside to match surrounding properties (Curb Appeal)
Upgrade interior (Carpet, Paint, Appliances, Fixtures)
Reduce Expenses to 35% or less of Potential Rental Income
Work with Property Managers
Better Tenant Screening
Find More Income
Garage
Laundry

9. Assumptions Inflation Rate- 3% Yearly Rent Increase- 2%
Initial Cap Rate 4.4%
Vacancy Rate 6%

10. Input to Financials Unit Mix 20 Units 2 bed 1 bath each Purchase Price
$1,398,700
Down Payment 25%
$349,675
Plus Acquistion Cost (inspection, title, etc)
$41,961
Plus Loan Fee/Cost (Points, etc)
$31,471
Repositioning Cost 5K/Unit
$100,000
Mortgages
$1,049,025
Equal Initial Investment
$523,107
Mortgage Data
Amount
$1,049,025
Interest Rate
5.5%
Amortization Period 25
Loan Term
Payments/Year 12
Periodic Payment
-$6,442
Annual Debt Service
-$77,303.18
Unit Mix 20 Units 2 bed 1 bath each

11. Cash Flow Model POTENTIAL RENTAL INCOME -Vacancy & Credit Losses
=Effective Rental Income
+Other Income (collectable)
=Gross Operating Income
-Operating Expenses
=NET OPERATING INCOME (NOI)
-Debt Service
=CASH FLOW BEFORE TAXES

12. Financials ROI By Year -4.1% 1.9% 2.2% 2.5% 2.9% 5 Year IRR 5%
Taxable Income
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
POTENTIAL RENTAL INCOME
$124,395
$147,600
$150,552
$153,563
$156,634
$159,767
-Vacancy & Credit Losses
$7,464
$8,856
$9,033
$9,214
$9,398
$9,586
=Effective Rental Income
$116,931
$138,744
$141,519
$144,349
$147,236
$150,181
+Other Income (collectable) $0
=Gross Operating Income
-Operating Expenses
$61,246
$51,660
$52,693
$53,747
$54,822
$55,918
=NET OPERATING INCOME
$55,685
$87,084
$88,826
$90,602
$92,414
$94,263
Debt Service
$77,303
CASH FLOW BEFORE TAXES
-$21,618
$9,781
$11,523
$13,299
$15,111
$16,959
ROI By Year
-4.1%
1.9%
2.2%
2.5%
2.9%
Returns
-$523,107
$649,672.48
5 Year IRR 5%

13. Equity Build Appreciation Equity $402,375 $431,403 $461,012 $491,212
Debt Reduction
$20,109
$41,352
$63,793
$87,500
$112,544
Reposition(Change in NOI/Cap Rate)
$523,312
$552,340
$581,948
$612,149
Inflation
$41,961
$85,181
$129,697
$175,549
$222,777
Total Appreciation by Year
$62,070
$649,844
$745,830
$844,997
$947,470
Property Value Based on NOI
$1,451,400
$1,480,428
$1,510,037
$1,540,237
$1,571,042
Equity
$402,375
$431,403
$461,012
$491,212
$522,017

14. Cash Flow

15. Internal Rate of Return

16. Equity Build

17. Palmdale

18. Why Palmdale Last Undeveloped Area of Los Angeles County
Future Terminal for High Speed Rail
Focusing on Solar and Wind Energy

19. Property Overview Unit Mix 4 Units 2 bed 1 bath each
Price
$360,000
No. Units 4
Size
3332
Price/Unit
$90,000
No. Stories 2
Lot Size
7829
GRM
10.7
Cap Rate
4.8%
Unit Mix 4 Units 2 bed 1 bath each
38739 E 5th ST E, Palmdale 93550

20. Approach to Increase Cash
Invest to increase Rents
Survey area for properties renting for $800 Rents
Upgrade outside to match surrounding properties (Curb Appeal)
Upgrade interior (Carpet, Paint, Appliances, Fixtures)
Reduce Expenses to 25% or less of Potential Rental Income
Work with Property Managers
Better Tenant Screening
Find More Income
Garage
Laundry

21. Market Comparisons
Address
# Units
L/S Price
GSI
GRM
Price/Unit
Price/SqFt
Sq Ft
Lot
Year
Rent
38728 Larkin AV 4
$385,000
$42,000
9.17
$96,250
$123.40
3,120
8,259
1,972
760
th ST E
$345,000
$37,740
9.14
$86,250
$110.58
8,276
1,973
780
th PL E
$299,900
$33,600
8.93
$74,975
$124.96
2,400
7,832
1,980
625
38423 E 10th PL E
$355,000
$43,500
8.16
$88,750
$92.45
3,840
7,856
1,981
950
120 E AVENUE Q7 E
$375,000
$36,600
10.25
$93,750
$100.27
3,740
6,741
800
38739 E 5th ST E
$360,000
10.71
$90,000
$108.04
3,332
7,829
1,969
700
Avg
$351,980
Average
$110.33
Median
Comps are the Primary Approach for Determining Value in 1-4 Unit Properties

22. Financials 10% Down Purchase Price $360,000 Down Payment $36,000
Plus Acquistion Cost
$7,200
Plus Loan Fee/Cost
$3,240
Repositioning Cost 5K/Unit
$20,000
Less Mortgages
$324,000
Equal Initial Investment
$66,440
Mortgage Data
Amount
$324,000
Interest Rate
5.0%
Amortization Period 30
Loan Term
Payments/Year 12
Periodic Payment
-$1,894
Annual Debt Service
-$22,728.86

23. Financials ROI -10.4% 6.2% 7.1% 7.9% 8.7% 5 Year IRR 22%
Taxable Income
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
POTENTIAL RENTAL INCOME
$33,600
$38,400
$39,168
$39,951
$40,750
$41,565
-Vacancy & Credit Losses
$1,680
$1,920
$1,958
$1,998
$2,038
$2,078
=Effective Rental Income
$31,920
$36,480
$37,210
$37,954
$38,713
$39,487
+Other Income (collectable) $0 $1
=Gross Operating Income
$36,479
-Operating Expenses
$16,095
$9,600
$9,792
$9,988
$10,188
$10,391
=NET OPERATING INCOME
$15,825
$26,879
$27,418
$27,966
$28,525
$29,096
Debt Service
$22,729
CASH FLOW BEFORE TAXES
-$6,904
$4,150
$4,689
$5,237
$5,796
$6,367
ROI
-10.4%
6.2%
7.1%
7.9%
8.7%
Returns
-$66,440
-6,904
4,150
4,689
5,237
173,135
5 Year IRR
22%

24. Equity Build Up Appreciation Debt Reduction $6,681 $13,703 $21,085
$6,681
$13,703
$21,085
$28,844
$37,000
Reposition(Change in NOI/Cap Rate)
Inflation
$10,800
$21,924
$33,382
$45,183
$57,339
Total Appreciation by Year
$17,481
$35,627
$54,466
$74,027
$94,339
Equity
$53,481
$71,627
$90,466
$110,027
$130,339
ROE
-12.9%
5.8%
5.2%
4.8%
4.4%

25. Cash Flow Comparison

26. Internal Rate of Return

27. Equity Build Up

28. References Integra Realty Resources, Inc. (IRR.com)
Multiple Listing Service (MLS)
Bureau of Labor Statistics
CCIM Site to do Business (STDB)
Google Earth
Realtor.com
Loopnet.com