Overview of Investments and Assumptions
429 Rathbone
This 2 unit property was purchased in May of 2012 as the market was starting to make its comeback. The investment partner on this transaction was able to purchase this property through a leveraged capital transaction by obtaining a renovation loan through a reputable mortgage company. The total rehab budget for this project was $36,500. The investor had to put down $30,000 which was 25% of the total acquisition cost ($83,500 + $36,500) (25%) = $30,000
The total mortgaged amount on this came to $90,000
This property nets the investor $650 a month in pure cash flow. Not to mention the appraised value of this property after rehab came to $140,000. The contract with this investor is a minimum 7 year term. Let's assume we liquidate the last day of that seventh year:
Cash Flow: 84 months at $650 (assume no rent increases and 95% rate of rent collection)
(84 Months x $650.00) (95%) = $51,870
Liquidation: We will assume a 4% annual increase of value (Based on appraised value of $140,000) over a 7 year term. Value after 7 years = $185,152. Assume closing costs will be 6% of total sale value.
Sales Price: $185,000 --- Closing Costs $11,100 --- Mortgage Balance (after 7 years): $78,948 --- Return original investment ---Total Proceeds = $64,952
Total investor share: $62,476 [Original investment returned ($30,00)] + [1/2 of remaining equity ($32,476)]
TOTAL PROFIT: $84,346 [$51,870 (Cash Flow) + $32,476 (Proceeds from Liquidation)]
R.O.I = 281.15% Profit($84,346)/Cost ($30,000) x 100
349-351 S. LaSalle
This large Victorian Style two unit was a great pick up. The investor on this deal was also able to leverage a renovation loan to purchase this property. The home was purchased for $63,000 and we obtained renovation funds of $42,000 With a $20,000 down payment. The final mortgage against this property was $105,000. After the IMPACT Group renovated it and rented it, the bank valuated it at $140,000! Instant equity gain of $35,000 on this purchase! Now, let's take a look at the numbers.
Monthly Mortgage Payment = $1,170
This includes insurance, taxes, rubbish collection, and water.
The combined rental income from both units is $2,500 a month.
That makes for a monthly cash flow of $1,330!
This home is also on a minimum 7 year contract with the investor. Let's see what his projected ROI
is on this property.
Cash Flow: 84 months at $665 (assume no rent increases and 95% rate of rent collection)
(84 x $665)(95%) = $53,067.00
Liquidation: We will assume a 4% annual increase of value (Based on appraised value of $140,000) over a 7 year term.
Value after 7 years = $185,152. Assume closing costs will be 6% of total sale value.
Sales Price $185,000 --- Closing Costs $11,100 --- Mortgage Balance (after 7 years) $90,876 --- Investors original investment returned ---Total Proceeds = $63,024 (Sales price - Closing Cost - investor's downpayment - Mortgage Balance)
Total Investor share: $51,512 [Original Investment returned ($20,000)] + [1/2 of remaining equity ($31,512)]
TOTAL PROFIT: $84,579.00 [Total Cash flow ($53,067) + Profit from Liquidation ($31,512)]
R.O.I = 422% Profit($84,579)/Cost (20,000) x 100
416 Harrison
This property was a flip transaction. A flip transaction is essentially purchasing a home with the intent to renovate it and sell it as quickly as possible. While flipping properties is not the primary focus of IMPACT Equities Group LLC, there will be opportunities that arise for this type of transaction. If risk is low enough and profit margins are high enough we may offer investors a chance for a quick profit on this type of transaction.
The property was purchased by the investor with cash for $75,000. The investor also provided an additional $29,000 for renovations.
The closing date on the purchase was March 1st, 2010 and the sale date was Dec 22nd, 2010 for $140,000.
This is about 3 months longer than this transaction should have taken. However, there were some external factors that played into the extended sale time of the property:
-Expiration of $8,000 First Time Home Buyer government tax incentive.
-Lending requirements at the time did not allow a buyer to purchase a "flipped" property within 90 days of it being sold.
Ideally a flip of this magnitude would take no longer than 6 months. Which would drastically change the AROI from 16.9% to 28.8%. Despite the tumultuous environment surrounding this flip, the investor was still able to achieve a modest return within a relatively short period of time.
149 Calumet
This property was a flip transaction.
The property was purchased for $53,000 and IMPACT Equities Group came in with $29,350 to help the investor purchase the property. In a matter of 5 months we completed the purchase, rehab, and sold the property without even listing it with a real estate agent. Our estimation of rehab cost was almost dead on. We estimated 60,000 would be needed and that rehab would take 3 months at best. Total rehab cost was just over 63,000 and it took a total of 4 months from when we bought to when we sold. The final sales price at $155,000 made for a fantastic return.
714 Sexton
The investor on this deal was also able to leverage a renovation loan to purchase this property. The home was purchased for $74,000 and we obtained renovation funds of $34,400 With a $5,750 down payment of which the investor came up with $2,000. The final mortgage against this property was $108,000. After the IMPACT Group renovated it and rented it, the bank valuated it at $130,000! Instant equity! Now, let's take a look at the numbers.
Monthly Mortgage Payment = $1,300
This includes insurance, taxes, rubbish collection, and water.
The combined rental income from both units is $2,500 a month.
That makes for a monthly cash flow of $1,200!
This home is also on a minimum 7 year contract with the investor. Let's see what his projected ROI
is on this property.
Cash Flow: 84 months at $600 (assume no rent increases and 95% rate of rent collection)
(84 x $600)(95%) = $47,880
Liquidation: We will assume a 4% annual increase of value (Based on appraised value of $140,000) over a 7 year term.
Value after 7 years = $172,000. Assume closing costs will be 6% of total sale value.
Sales Price $172,000 --- Closing Costs $10,320 --- Mortgage Balance (after 7 years) $92,403 --- Investors original investment returned ---Total Proceeds = 63,527 (Sales price - Closing Cost - downpayment - Mortgage Balance)
Total Investor share: $33,763.50 [Original Investment returned ($2,000)] + [1/2 of remaining equity ($31,763.50)]
TOTAL PROFIT: $81,643.50 [Total Cash flow ($47,880) + Profit from Liquidation ($33,763.50)]
R.O.I = 4,082% Profit($84,579)/Cost (2,000) x 100
741 Sheridan
The investor on this deal was also able to leverage a renovation loan to purchase this property. The home was purchased for $80,360 and we obtained renovation funds of $34,895 With a $28,820 downayment provided by the investor. The final mortgage against this property was $87,671. After the IMPACT Group renovated it and rented it, the bank valuated it at $150,000! Now, let's take a look at the numbers.
Monthly Mortgage Payment = $1,100
This includes insurance, taxes, rubbish collection, and water.
The combined rental income from both units is $2,100 a month.
That makes for a monthly cash flow of $1,000!
This home is also on a minimum 7 year contract with the investor. Let's see what his projected ROI
is on this property.
Cash Flow: 84 months at $500 (assume no rent increases and 95% rate of rent collection)
(84 x $500)(95%) = $39,900
Liquidation: We will assume a 4% annual increase of value (Based on appraised value of $145,000) over a 7 year term.
Value after 7 years = $192,000. Assume closing costs will be 6% of total sale value.
Sales Price $192,000 --- Closing Costs $11,520 --- Mortgage Balance (after 7 years) $78,232 --- Investors original investment returned ---Total Proceeds = 73,428 (Sales price - Closing Cost - downpayment - Mortgage Balance)
Total Investor share: $65,534.00 [Original Investment returned ($28,820)] + [1/2 of remaining equity ($36,714.00)]
TOTAL PROFIT: $105,434.00 [Total Cash flow ($39,900) + Profit from Liquidation ($65,534.00)]
R.O.I = 365.83% Profit($105,434)/Cost (28,820) x 100