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Low Cost Real Estate

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					                                                                                     Real Estate Developmen
Capital
 Land cost                        $   3,000,000.00
 Development costs                $   1,068,756.00
 Total capital                    $   4,068,756.00
Variable costs
 Cost per home                    $       212,500.00




Construction starts in                        2008                     S&L taxes (per standard unit)
Years in cash flows                               7                   S&L taxes (per view unit)
Capital costs                     $   4,068,756.00                    After tax cost of capital
Cash operating costs (per lot)    $     212,500.00                     Pre tax cost of capital
Price per standard unit           $     350,000.00
Price per view unit               $     400,000.00                    Agent fee
Price per standard lot            $     100,000.00                    Total real estate fee (yearly)
Price per view lot                $     150,000.00
Number of standard units                         42
Number of view units                             18                   Risk free rate
Debt rate                                      80%                    Equity risk premium
Interest rate                                   7%                     Net present value
Term (yrs.)                                       5                   Internal rate return
Loan PMT (yearly)                      $793,865.38                     Pre tax return
Inflation Rate                                3.0%                    Appraised Value




Years in construction             Years                Revenue        Expenses
                              1                 2009   $ 3,125,442.86 $                 1,888,538.14
                              2                 2010   $ 3,125,442.86 $                 1,943,126.36
                              3                 2011   $ 3,125,442.86 $                 1,999,352.22
                              4                 2012   $ 3,125,442.86 $                 2,057,264.85
                              5                 2013   $ 3,125,442.86 $                 2,116,914.87
                              6                 2014   $ 3,125,442.86 $                 2,178,354.39
                              7                 2015   $ 3,125,442.86 $                 2,241,637.09
                              8                    0   $          -    $                         -
                              9                    0   $          -    $                         -
                             10                    0   $          -    $                         -
                             11                    0   $          -    $                         -
                             12                    0   $          -    $                         -
                             13                    0   $          -    $                         -
                             14                    0   $          -    $                         -
                             15                    0   $          -    $                         -
al Estate Development in Lake Chelan Washington
                                                             Federal Tax Bracket
                                      taxable income over    Not over                  Tax Rate


                                      $               -      $             50,000.00              15%
                                      $         50,000.00    $             75,000.00              25%
                                      $         75,000.00    $            100,000.00              34%
                                      $        100,000.00    $            335,000.00              39%
                                      $        335,000.00    $         10,000,000.00              34%
                                      $     10,000,000.00    $         15,000,000.00              35%
                                      $     15,000,000.00    $         18,333,333.00              38%
        $     1,694.00                $     18,333,333.00                                         35%
        $     1,936.00                                       Average Tax Rate                     34%
                 4.58%
                  7.0%

                    7%
        $    68,931.00


                3.875%
                    3%
        $ 117,222.60
                    7%
                   11%
        $ 4,999,729.80




                                                             Balance
       S&L taxes       Interest (IDC) Principle               $         3,255,004.80 Depreciation
        $    15,127.14 $ 227,850.34 $           566,015.05    $         2,688,989.75 $    39,555.41
        $    15,127.14 $ 188,229.28 $           605,636.10    $         2,083,353.66 $    39,555.41
        $    15,127.14 $ 145,834.76 $           648,030.63    $         1,435,323.03 $    39,555.41
        $    15,127.14 $ 100,472.61 $           693,392.77    $           741,930.26 $    39,555.41
        $    15,127.14 $ 51,935.12 $            741,930.26    $                 0.00 $    39,555.41
        $    15,127.14 $           -   $               -      $                  -   $    39,555.41
        $    15,127.14 $           -   $               -      $                  -   $    39,555.41
        $          -    $          -   $               -      $                  -   $            -
        $          -    $          -   $               -      $                  -   $            -
        $          -    $          -   $               -      $                  -   $            -
        $          -    $          -   $               -      $                  -   $            -
        $          -    $          -   $               -      $                  -   $            -
        $          -    $          -   $               -      $                  -   $            -
        $          -    $          -   $               -      $                  -   $            -
        $          -    $          -   $               -      $                  -   $            -
                                                Cash flows
Taxable Income Federal Tax %    Fed. Taxes      $ (813,751.20) This first year represents our downpayment on the loan
 $ 954,371.83             34%    $ 324,486.42   $ 103,425.77
 $ 939,404.67             34%    $ 319,397.59   $     53,926.39
 $ 925,573.33             34%    $ 314,694.93   $       2,403.18
 $ 913,022.84             34%    $ 310,427.77   $    (51,242.29)
 $ 901,910.32             34%    $ 306,649.51   $ (107,114.05)
 $ 892,405.92             34%    $ 303,418.01   $ 628,543.31
 $ 829,123.22             34%    $ 281,901.89   $ 586,776.73
 $          -              0%    $         -    $            -
 $          -              0%    $         -    $            -
 $          -              0%    $         -    $            -
 $          -              0%    $         -    $            -
 $          -              0%    $         -    $            -
 $          -              0%    $         -    $            -
 $          -              0%    $         -    $            -
 $          -              0%    $         -    $            -
                                 $         -    $            -
                                                $            -
$   -
ents our downpayment on the loan
                                            Final Model
Acres per lot                                                                          0.5
Amount of land (acres)                                                                  37
Number of acres to be built on                                                      29.97
# of lots                                                                             30.0
Number of units                                                                         60
Length of subdivision                                                              3,848
Home size (Sq. Ft.)                                                                  2000
Road system total sq ft (19ft wide by 3,848 ft long)                              73,112
Water infrastructure linear ft. (3,848 ft long with 30 10ft offshoots)               4148
Land cost                                                                 $ 3,000,000.00
Prime rate                                                                             5%
Prime + 2                                                                              7%
Wa St. B&O tax                                                                    0.484%
B&O liability per unit
Markup on Sale price                                                                 15%
Sale price per sq ft                                                      $       125.00
Cost of construction per sq. ft.                                          $       106.25
Sewer (sq ft) including trench, backfill, and resurfacing                 $       200.00
Telecom infra (sq ft) electric, cable, phone. Includes T,B,R, & conduit   $         7.00
Road system (per sq. ft.)
Water line (per linear ft.)                                               $         70.00
Excavation costs (per hr.)                                                $         95.00
Agent fee                                                                              7%
Price of homes                                                            Standard lot    View lot
Home price                                                                $   350,000.00 $ 400,000.00


                               Cost to build                                                 Sq Ft
1k Sq. Ft. Home                                                           $   106,250.00                 1000
2k Sq. Ft. Home                                                           $   212,500.00                 2000
3k Sq. Ft. Home                                                           $   318,750.00                 3000

                               Price of land                                                 # of lots
Standard lot                                                              $   100,000.00                  42
View lot                                                                  $   150,000.00                  18

Total sewar cost                                                          $   769,600.00
Total road cost                                                           $          -
Total water line cost                                                     $   269,360.00
Total telecom cost                                                        $    29,036.00
Total trenching cost                                                      $       760.00
Agent fee (standard unit)                                                 $     7,000.00
Agent fee (view unit)                                                     $    10,500.00
Total upfront costs                                                       $ 1,068,756.00

Depreciable upfront costs                                                 $ 1,067,996.00
Years of depreciation                                                              27.00
                                     Land Measurments



Sq. Yards                                                                         972,840.00
hieght                                                                           0.833333333
volume (cubic yards)                                                              810,700.00
Land Cost                                                                $      3,800,000.00

Excavation (acre)
 Clearing and Grubbing                                                   $         11,000.00
 Adjusted for private sector wage rates                                  $        347,863.25
 Excavation and Embankment (cubic Yards)                                 $             13.50
 Sanitary Sewer system
 Water production
 Power production
 Road development
     According to http://www.juneau.org/cdd/landplan/delevop.html

                                                                         High
Excavation cost (orchard clearing, 1k/acre)                              $               -
Excavation cost (footings, foundation,)                                  $          5,000.00
Total excavation cost per lot                                            $          5,000.00
                                 From Aaron

According to http://www.city-data.com/city/Chelan-Washington.html

                                 Homes in the 400-450k range
Lots                                                                     NPV
                                                                    30   $      (1,746,505.00)
                                                                    33   $      (1,496,885.00)
                                                                    37   $      (1,184,859.00)
                                                                    43   $        (783,682.00)
                                                                    50   $        (248,780.00)
                                                                    60   $         500,081.00
                                                                    75   $       1,623,375.00

                                    Homes in the 350-400k
Lots                                                                     NPV
                                                                    30   $   (1,804,301.00)
                                                                    33   $   (1,561,102.00)
                                                                    37   $   (1,257,103.00)
                                                                    43   $     (866,248.00)
                                                                    50   $     (345,107.00)
                                                                    60   $      384,489.00
                                                                    75   $    1,478,885.00
                     Single family home, 3 bed, 55 over community
                   Sell price        $                   299,000.00
                   Building cost     $                   300,000.00
                   Sq. Ft.                                     2000
                   Price/Sq. Ft.     $                       150.00




$     407,000.00

$ 10,944,450.00




Medium         Low
$    37,000.00                    0
$     4,000.00 $          3,000.00
$    41,000.00 $          3,000.00




IRR




            15%
            41%


IRR




            13%
            37%
                                                               NPV
                                                    Homes in the 400-450k range


      $2,000,000.00

      $1,500,000.00

      $1,000,000.00

        $500,000.00
NPV




                 $-
                        0        10          20         30          40            50    60    70
       $(500,000.00)

      $(1,000,000.00)

      $(1,500,000.00)

      $(2,000,000.00)
                                                                   Units




                                                 NPV
                                      Homes in the 350-400k range


         $2,000,000.00

         $1,500,000.00

         $1,000,000.00

           $500,000.00
NPV




                        $-                                                                   NPV
                             0            20             40                60          80
          $(500,000.00)

        $(1,000,000.00)

        $(1,500,000.00)

        $(2,000,000.00)
                                                  Number of Units
     NPV
80

				
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