Parklane Place 40 Unit Apartment Building Investment Analysis Rental

Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example 3523 East Vaness Ave Vancouver, BC v8R 1M2 Canada CTA Real Estate Neil Williams 1393 Elwood Ave, Vancouver, BC V7R1 m1 Canada Bus 604-897-1563 Cell 203-456-8394 nwilliams@globalnet.com www.cta-realestate.com Property Information Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Property Description Medium quality, well cared for apartment building Address 3523 East Vaness Ave Vancouver, BC v8R 1M2 Canada Location Description Close access to bus and 15 minutes to downtown Vancouver Purchase Price Purchase Price Acquisition Costs Total Purchase Price Legal Legal 12160 DL12989 Plan 2634 Zoning Multi family Encumbrances $2,000,000 first mortgage in Favor of RBC Morgage Inc. March 23, 2008 Investor Pro Rental Apartment Building 3,500,000 70,000 2.00% $ 3,570,000 CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Property Information Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Property Taxes Information Assessment Date Property Taxes Roll or Identification Number Assessed Value Land Improvements $ Land Dimensions Frontage Land Area Building Age No of Floors Building Area Units. Rentable Area Total No. of Units Parking Uncovered Covered Other Total Parking Utilities. Tenant pays for: Heat Heat Heat Gas Individual air conditioning units Construction Wood Frame 12 45 57 890,000 2,300,000 3,190,000 Jan 2007 $ 78,000 223731 89MN 8051 March 23, 2008 Investor Pro Rental Apartment Building Irregular 320 46,000 Ft Sq. Ft 15 Years 3 38,000 Sq. Ft 36,000 Sq. Ft 40 Building Equipment & Systems Elevators No. of Elevators Three stop hydraulic elevator 1 Mechanical Equipment Central heating system for common area Electrical System Central system CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 2 Property Information Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example March 23, 2008 Investor Pro Rental Apartment Building CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 3 Client Information Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Peter Gibbs Audon Estates 1674 Oak St Vancouver, BC V6r1M1 Canada March 23, 2008 Investor Pro Rental Apartment Building Contact Information Office Tel: Mobile: Home Tel: Fax: E-mail: 604-786-9900 604-777-9856 604-786-3810 604-786-9911 pgibbs@smartt.net CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Income & Expense Statement Yearly Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Year 1 REVENUE One bedroom units Two bedroom Units Laundry Parking Potential Gross Income Less: Vacancy & Credit Loss Allowance Effective Gross Income Operating Expenses Property Taxes Insurance Maintenance Resident Caretaker Property Management Other Expenses Net Operating Income Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 March 23, 2008 Investor Pro Rental Apartment Building Year 9 Year 10 Year 11 270,000 198,000 7,200 24,000 499,200 11,556 487,644 280,800 205,920 7,560 25,200 519,480 12,020 507,460 291,900 214,200 7,939 26,460 540,499 12,502 527,997 303,600 222,660 8,333 27,786 562,379 13,002 549,377 315,900 231,660 8,750 29,172 585,482 13,530 571,952 328,500 240,840 9,187 30,630 609,157 14,071 595,086 341,700 250,560 9,648 32,160 634,068 14,640 619,428 355,200 260,640 10,133 33,768 659,741 15,227 644,514 369,600 270,900 10,637 35,460 686,597 15,838 670,759 384,300 281,880 11,170 37,230 714,580 16,477 698,102 399,600 293,040 11,726 39,096 743,462 17,135 726,327 35,000 12,000 26,000 36,000 19,506 39,936 168,442 319,202 36,400 12,600 27,040 37,440 20,298 41,558 175,337 332,123 37,856 13,230 28,122 38,938 21,120 43,240 182,505 345,492 39,370 13,892 29,246 40,495 21,975 44,990 189,969 359,408 40,945 14,586 30,416 42,115 22,878 46,839 197,779 374,173 42,583 15,315 31,633 43,800 23,803 48,733 205,867 389,220 44,286 16,081 32,898 45,552 24,777 50,725 214,320 405,108 46,058 16,885 34,214 47,374 25,781 52,779 223,091 421,423 47,900 17,729 35,583 49,269 26,830 54,928 232,239 438,520 49,816 18,616 37,006 51,239 27,924 57,166 241,768 456,335 51,809 19,547 38,486 53,289 29,053 59,477 251,661 474,667 CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Income & Expense Statement Yearly Snapshot Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Year 1 REVENUE Potential Gross Income Less: Vacancy & Credit Loss Allowance Effective Gross Income Operating Expenses Net Operating Income Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 March 23, 2008 Investor Pro Rental Apartment Building Year 9 Year 10 Year 11 499,200 11,556 487,644 168,442 319,202 519,480 12,020 507,460 175,337 332,123 540,499 12,502 527,997 182,505 345,492 562,379 13,002 549,377 189,969 359,408 585,482 13,530 571,952 197,779 374,173 609,157 14,071 595,086 205,867 389,220 634,068 14,640 619,428 214,320 405,108 659,741 15,227 644,514 223,091 421,423 686,597 15,838 670,759 232,239 438,520 714,580 16,477 698,102 241,768 456,335 743,462 17,135 726,327 251,661 474,667 CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Operating Cash Flow Yearly Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Year 1 CASH FLOW BEFORE TAX Potential Gross Income Less: Vacancy & Credit Loss Allow. Effective Gross Income Operating Expenses Net Operating Income Less: Principle Payments Interest payments CASH FLOW BEFORE TAX Less: Income Tax at 42.00% CASH FLOW AFTER TAX INCOME TAX CALCULATIONS Net Operating Income Less: Interest Payments Depreciation & Amortization Taxable Income Income Tax at 42.00% 499,200 11,556 487,644 168,442 319,202 53,530 203,683 61,990 22,478 39,512 519,480 12,020 507,460 175,337 332,123 57,066 200,147 74,910 4,392 70,519 540,499 12,502 527,997 182,505 345,492 60,835 196,377 88,280 13,631 74,648 562,379 13,002 549,377 189,969 359,408 64,854 192,359 102,196 23,124 79,072 585,482 13,530 571,952 197,779 374,173 69,138 188,075 116,960 33,006 83,955 609,157 14,071 595,086 205,867 389,220 73,705 183,508 132,007 43,050 88,958 634,068 14,640 619,428 214,320 405,108 78,574 178,639 147,896 53,502 94,394 659,741 15,227 644,514 223,091 421,423 83,764 173,449 164,211 64,198 100,012 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 March 23, 2008 Investor Pro Rental Apartment Building Year 9 Year 10 686,597 15,838 670,759 232,239 438,520 89,297 167,915 181,307 75,301 106,006 714,580 16,477 698,102 241,768 456,335 95,196 162,017 199,122 86,795 112,327 319,202 203,683 62,000 53,520 22,478 332,123 200,147 121,520 10,456 4,392 345,492 196,377 116,659 32,456 13,631 359,408 192,359 111,993 55,057 23,124 374,173 188,075 107,513 78,585 33,006 389,220 183,508 103,213 102,499 43,050 405,108 178,639 99,084 127,385 53,502 421,423 173,449 95,121 152,853 64,198 438,520 167,915 91,316 179,288 75,301 456,335 162,017 87,663 206,655 86,795 CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Net Cash Flow (Before Tax) Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Operating Cash Flow (Before Tax) $ 61,990 74,910 88,280 102,196 116,960 132,007 147,896 164,211 181,307 199,122 Sale Proceeds (Before Tax) 6,432,908 Total Net Cash Flow (Before Tax) $ (1,838,010) 74,910 88,280 102,196 116,960 132,007 147,896 164,211 181,307 4,157,988 $ 3,327,745 March 23, 2008 Investor Pro Rental Apartment Building Year Year 1 Jan-Year 1 Dec Year 2 Jan-Year 2 Dec Year 3 Jan-Year 3 Dec Year 4 Jan-Year 4 Dec Year 5 Jan-Year 5 Dec Year 6 Jan-Year 6 Dec Year 7 Jan-Year 7 Dec Year 8 Jan-Year 8 Dec Year 9 Jan-Year 9 Dec Year 10 Jan-Year 10 Dec $ Investment (5,100,000) - $ Financing Borrow Paid Back 3,200,000 (2,474,042) Financial Returns (Before Tax) with Financing Internal Rate of Return (IRR) Net Present Value (NPV) at 11.00% Modified Internal Rate of Return (MIRR) Short Term Financing Rate (Before Tax) Short Term Reinvestment Rate (Before Tax) 12.09% $ 166,248 10.95% 8.000% 3.000% Financial Returns (Before Tax) without Financing Internal Rate of Return (IRR) 9.04% Net Present Value (NPV) at 11.00% ($ 647,649) Modified Internal Rate of Return (MIRR) 7.79% Short Term Financing Rate (Before Tax) 8.000% Short Term Reinvestment Rate (Before Tax) 3.000% CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Net Cash Flow (After Tax) Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Operating Cash Flow (After Tax) $ 39,512 70,519 74,648 79,072 83,955 88,958 94,394 100,012 106,006 112,327 Sale Proceeds (After Tax) 5,734,642 Total Net Cash Flow (After Tax) $ (1,860,488) 70,519 74,648 79,072 83,955 88,958 94,394 100,012 106,006 3,372,928 $ 2,210,003 March 23, 2008 Investor Pro Rental Apartment Building Year Year 1 Jan-Year 1 Dec Year 2 Jan-Year 2 Dec Year 3 Jan-Year 3 Dec Year 4 Jan-Year 4 Dec Year 5 Jan-Year 5 Dec Year 6 Jan-Year 6 Dec Year 7 Jan-Year 7 Dec Year 8 Jan-Year 8 Dec Year 9 Jan-Year 9 Dec Year 10 Jan-Year 10 Dec $ Investment (5,100,000) - $ Financing Borrow Paid Back 3,200,000 (2,474,042) Financial Returns (After Tax) with Financing Internal Rate of Return (IRR) Net Present Value (NPV) at 6.38% Modified Internal Rate of Return (MIRR) Short Term Financing Rate (After Tax) Short Term Reinvestment Rate (After Tax) 8.95% $ 446,385 8.18% 4.640% 1.740% Financial Returns (After Tax) without Financing Internal Rate of Return (IRR) 6.05% Net Present Value (NPV) at 6.38% ($ 128,814) Modified Internal Rate of Return (MIRR) 5.35% Short Term Financing Rate (After Tax) 4.640% Short Term Reinvestment Rate (After Tax) 1.740% CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Revenue Calculations. Yearly Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Year 1 REVENUE One bedroom units Two bedroom Units Laundry Parking Total Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 March 23, 2008 Investor Pro Rental Apartment Building Year 9 Year 10 270,000 198,000 7,200 24,000 499,200 280,800 205,920 7,560 25,200 519,480 291,900 214,200 7,939 26,460 540,499 303,600 222,660 8,333 27,786 562,379 315,900 231,660 8,750 29,172 585,482 328,500 240,840 9,187 30,630 609,157 341,700 250,560 9,648 32,160 634,068 355,200 260,640 10,133 33,768 659,741 369,600 270,900 10,637 35,460 686,597 384,300 281,880 11,170 37,230 714,580 CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Revenue Calculations. Yearly Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Year 11 REVENUE One bedroom units Two bedroom Units Laundry Parking Total March 23, 2008 Investor Pro Rental Apartment Building 399,600 293,040 11,726 39,096 743,462 CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 2 Expense Calculations Yearly Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 March 23, 2008 Investor Pro Rental Apartment Building Year 9 Year 10 Year 11 Property Taxes Insurance Maintenance Resident Caretaker Property Management Other Expenses Total 35,000 12,000 26,000 36,000 19,506 39,936 168,442 36,400 12,600 27,040 37,440 20,298 41,558 175,337 37,856 13,230 28,122 38,938 21,120 43,240 182,505 39,370 13,892 29,246 40,495 21,975 44,990 189,969 40,945 14,586 30,416 42,115 22,878 46,839 197,779 42,583 15,315 31,633 43,800 23,803 48,733 205,867 44,286 16,081 32,898 45,552 24,777 50,725 214,320 46,058 16,885 34,214 47,374 25,781 52,779 223,091 47,900 17,729 35,583 49,269 26,830 54,928 232,239 49,816 18,616 37,006 51,239 27,924 57,166 241,768 51,809 19,547 38,486 53,289 29,053 59,477 251,661 CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Vacancy & Credit Loss. Yearly Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Year 1 VACANCY & CREDIT LOSS One bedroom units Two bedroom Units Laundry Parking TOTAL VACANCY 5,400 5,940 216 11,556 5,616 6,178 227 12,020 5,838 6,426 238 12,502 6,072 6,680 250 13,002 6,318 6,950 263 13,530 6,570 7,225 276 14,071 6,834 7,517 289 14,640 7,104 7,819 304 15,227 7,392 8,127 319 15,838 7,686 8,456 335 16,477 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 March 23, 2008 Investor Pro Rental Apartment Building Year 11 7,992 8,791 352 17,135 CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Income & Expense Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example March 23, 2008 Investor Pro Rental Apartment Building TRUE Year 1 Year 2 ear 3 Y Year 4 Year 5 Year 6 Year 7 Year 8 earYear 10 Y 9 Year 11 499,200.00 540,499.20 585,482.40 519,480.00 562,378.80 609,157.20 659,740.80 714,579.60 Potential Gross Income 634,068.00 686,596.80 743,462.40 487,644.00 Gross 571,952.09 507,459.60 549,377.02 595,086.38 644,513.62 698,102.11 Effective527,997.02 Income 619,427.76 670,758.70 726,327.41 319,202.24 345,492.01 374,172.92 332,122.82 359,408.41 389,219.80 421,422.99 456,334.53 Net Operating Income 405,107.97 438,519.89 474,666.87 168,441.76 182,505.02 197,779.17 214,319.79 232,238.80 251,660.54 175,336.78 189,968.60 Operating Expenses205,866.58 223,090.63 241,767.58 11,556.00 12,502.18 13,530.31 14,640.24 15,838.10 17,134.99 12,020.40 13,001.78 14,070.82 15,227.18 Vacancy & Credit Loss Allowance 16,477.49 CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Financial Measures Summary Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Financial Returns. Cap Rate using the investment in Year 1 of $ 5,100,000 6.26% With Financing Internal Rate of Return (IRR) Before Tax After Tax Before Tax After Tax Before Tax 12.09% 8.95% $ 166,248 at 11.00% $ 446,385 at 6.38% 10.95% 8.00% 3.00% 8.18% 4.64% 1.74% March 23, 2008 Investor Pro Rental Apartment Building Without Financing 9.04% 6.05% ($ 647,649) at 11.00% ($ 128,814) at 6.38% 7.79% 8.00% 3.00% 5.35% 4.64% 1.74% Net Present Value (NPV) Modified Internal Rate of Return (MIRR) Short Term Financing Rate (Before Tax) Short Term Reinvestment Rate (Before Tax) Modified Internal Rate of Return (MIRR) Short Term Financing Rate (After Tax) Short Term Reinvestment Rate (Before Tax) After Tax Financial Operating Ratios Overall Operating Expense Ratio (Using PGI) 33.74% 33.75% 33.77% 33.78% 33.78% 33.80% 33.80% 33.81% 33.82% 33.83% Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Debt Coverage Ratio 1.24 1.29 1.34 1.40 1.45 1.51 1.57 1.64 1.70 1.77 Default Ratio (Breakeven) (Using PGI) 85.27% 83.27% 81.35% 79.52% 77.71% 76.02% 74.37% 72.80% 71.29% 69.83% CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Financial Measures Summary Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Cash on Cash Returns Based on Initial Equity in Year 1 Cash on Cash Cash on Cash Before Tax After Tax Annual Average Annual Average 3.26% 3.26% 2.08% 2.08% 3.94% 3.60% 3.71% 2.90% 4.65% 3.95% 3.93% 3.24% 5.38% 4.31% 4.16% 3.47% 6.16% 4.68% 4.42% 3.66% 6.95% 5.06% 4.68% 3.83% 7.78% 5.45% 4.97% 3.99% 8.64% 5.85% 5.26% 4.15% 9.54% 6.26% 5.58% 4.31% 10.48% 6.68% 5.91% 4.47% March 23, 2008 Investor Pro Rental Apartment Building Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Based on Adjusted Annual Equity Cash on Cash Cash on Cash Before Tax After Tax Annual Average Annual Average 3.26% 3.26% 2.08% 2.08% 3.94% 3.60% 3.71% 2.90% 4.65% 3.95% 3.93% 3.24% 5.38% 4.31% 4.16% 3.47% 6.16% 4.68% 4.42% 3.66% 6.95% 5.06% 4.68% 3.83% 7.78% 5.45% 4.97% 3.99% 8.64% 5.85% 5.26% 4.15% 9.54% 6.26% 5.58% 4.31% 10.48% 6.68% 5.91% 4.47% CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 2 Goal Seeking Results Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example SUMMARY Internal Rate of Return (IRR) BEFORE TAX With Financing Based on data entered Goal seeking results for IRR Without Financing Based on data entered Goal seeking results for IRR March 23, 2008 Investor Pro Rental Apartment Building Buy Sell Compounding Appreciation Rate 12.09% 11.00% 11.00% 9.04% 11.00% 11.00% $ 5,100,000 $ 5,266,248 $ 5,100,000 $ 5,100,000 $ 4,452,351 $ 5,100,000 $ 6,780,955 $ 6,780,955 $ 6,284,065 $ 6,780,955 $ 6,780,955 $ 8,716,687 2.89% 2.56% 2.11% 2.89% 4.30% 5.51% AFTER TAX With Financing Based on data entered Goal seeking results for IRR Without Financing Based on data entered Goal seeking results for IRR 8.95% 7.04% 7.04% 6.05% 7.04% 7.04% $ 5,100,000 $ 5,465,585 $ 5,100,000 $ 5,100,000 $ 4,673,696 $ 5,100,000 $ 6,780,955 $ 6,780,955 $ 5,936,925 $ 6,780,955 $ 6,780,955 $ 7,765,168 2.89% 2.18% 1.53% 2.89% 3.79% 4.29% CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Goal Seeking Results Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example March 23, 2008 Investor Pro Rental Apartment Building GOAL SEEKING RESULTS BEFORE TAX With Financing To achieve an Internal Rate of Return (IRR) of 11.00% before tax, you would have to either: a) Buy the property for $ 5,266,248 and sell for $ 6,780,955 in 10 years which is 2.56% compounding increase in value per year. b) Buy the property for $ 5,100,000 and sell for $ 6,284,065 in 10 years which is 2.11% compounding increase in value per year. Without Financing To achieve an Internal Rate of Return (IRR) of 11.00% before tax, you would have to either: a) Buy the property for $ 4,452,351 and sell for $ 6,780,955 in 10 years which is 4.30% compounding increase in value per year. b) Buy the property for $ 5,100,000 and sell for $ 8,716,687 in 10 years which is 5.51% compounding increase in value per year. GOAL SEEKING RESULTS AFTER TAX With Financing To achieve an Internal Rate of Return (IRR) of 7.04% after tax, you would have to either: a) Buy the property for $ 5,465,585 and sell for $ 6,780,955 in 10 years which is 2.18% compounding increase in value per year. b) Buy the property for $ 5,100,000 and sell for $ 5,936,925 in 10 years which is 1.53% compounding increase in value per year. Without Financing To achieve an Internal Rate of Return (IRR) of 7.04% after tax, you would have to either: a) Buy the property for $ 4,673,696 and sell for $ 6,780,955 in 10 years which is 3.79% compounding increase in value per year. b) Buy the property for $ 5,100,000 and sell for $ 7,765,168 in 10 years which is 4.29% compounding increase in value per year. INVESTMENT TAB ENTRIES. Allocations of the Purchase Price between Land and Improvements to achieve the desired Internal Rate of Return (IRR) BEFORE TAX With Financing No Financing 11.00% IRR 11.00% IRR 2,065,195 1,746,020 3,201,053 2,706,331 $ 5,266,248 $ 4,452,351 AFTER TAX With Financing No Financing 7.040% IRR 7.040% IRR 2,143,367 1,832,822 3,322,219 2,840,874 $ 5,465,585 $ 4,452,351 Land Building Purchase Price (Year 1 Total) % Allocation 39.22% 60.78% 100.00% Notes: The allocation of the Purchase Price between Land and Improvements uses the same % allocation used in the First Year of the Investment Folder grid. The Purchase Price (Year 1 Total) excludes entries using the Depreciation methods "Amort. Mortgage Fees" and "Amortize" CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 2 Cash Flow from Sale Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Cash Flow from Sale (Before Tax) Sale Price Less: Real Estate Commission Selling Expenses Legal Expenses Net Sale Price Less: Mortgage Repayment Cash Flow from Sale (Before Tax) Cash Flow from Sale (After Tax) Net Sale Price Less: Capital Gains Tax Net Sale Price Less Cost Basis Capital Gains Less: Recaptured Depreciation Tax Tax Value of Improvements on Sale Less Undepreciated Balance Recaptured Depreciation March 23, 2008 Investor Pro Rental Apartment Building $ 6,780,955 339,048 6,000 3,000 6,432,908 2,474,042 3,958,865 6,432,908 6,432,908 5,100,000 1,332,908 x 42.00% x 50.00% 279,911 3,100,000 2,103,918 996,082 x 42.00% 418,354 5,734,642 2,474,042 3,260,600 Net Proceeds (After Tax) Less: Mortgage Repayment Cash Flow from Sale (After Tax) CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Input Data Summary Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Investment Analysis Note For information on Revenue, Expenses and Vacancy inputs and projections see the Revenue, Expense and Vacancy projection description reports. Project Information Analysis Period Starting date Purchase Price Acquisition Cost Total Purchase Price Building Area Residential Rentable Area No. of Units Land Area Frontage March 23, 2008 Investor Pro Rental Apartment Building 10 years January Year 1 $ $ 3,500,000 70,000 2.00% 3,570,000 38,000 Sq. Ft 36,000 Sq. Ft 40 46,000 Sq. Ft 320 Ft Investor Information Marginal Tax Rate 42.00% Capital Gain. 50.00% added to income Desired Return on Investment (Discount Rate) Before Tax: 11.00% After Tax: 6.38% Short Term Reinvestment Rates Before Tax: After Tax: Short Term Financing Rates Before Tax: After Tax: 3.000% 1.740% 8.000% 4.640% Investment information CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Input Data Summary Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Total Invested in Year 1 is $ 5,100,000 March 23, 2008 Investor Pro Rental Apartment Building CCA Class Land Building Land Building Date Jan, Year 1 Jan, Year 1 Amount $ 2,000,000 $ 3,100,000 CCA Rate 4.00% First Year 50.00% Claim CCA in Last Year Yes Financing First Mortgage Starts: Type: Amount: Interest Rate: Payment Frequency: Compounding Frequency: Addit. Payments/Borrowing: Rounding No of Terms: January Year 1 Standard Mortgage $ 3,200,000 Fixed Monthly Semi-annually No Up to Nearest Cent 1 Nominal Annual Interest Rate 6.500% Term 1 Time Period 10 yrs & 0 mos Amortization 25 yrs & 0 mos Sale Information Sale price at the end of 10 years is $ 6,780,955 based on the income for the year following sale and a Cap Rate of 7.00% Selling Expenses Selling Expenses Legal Expenses Real Estate Commissions $ 6,000 $ 3,000 5.00% of the Sale Price Allocation of Improvements on Sale Same ratio as on acquisition CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 2 Projection Descriptions Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example March 23, 2008 Investor Pro Rental Apartment Building EXPENSES PROJECTIONS Property Taxes Entry Choice: $ per Year Year 1 Jun $35,000.00 per Year paid every 12 months Compounding at 4.00% per year for next 9 years and 7 months Insurance Entry Choice: $ per Year Year 1 Jan $12,000.00 per Year paid every 12 months Compounding at 5.00% per year for next 10 years Maintenance Entry Choice: $ per Unit x Total No.of Units per Year Quantity: 40 Year 1 Jan $650.00 per Unit x Total No.of Units per Year paid monthly for 12 months Compounding at 4.00% per year for next 10 years Resident Caretaker Entry Choice: $ per Month Year 1 Jan $3,000.00 per Month paid monthly for 12 months Compounding at 4.00% per year for next 10 years Property Management Entry Choice: % of Effective Gross Income Year 1 Jan 4.00% of Effective Gross Income Constant for next 10 years and 11 months Other Expenses Entry Choice: % of Potential Gross Income Year 1 Jan 8.00% of Potential Gross Income Constant for next 10 years and 11 months REVENUE PROJECTIONS One bedroom units Entry Choice: $ per Unit per Month CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Projection Descriptions Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Quantity: 25 Year 1 Jan $900 per Unit per Month paid monthly for 12 months Compounding at 4.00% per year for next 10 years March 23, 2008 Investor Pro Rental Apartment Building Two bedroom Units Entry Choice: $ per Unit per Month Quantity: 15 Year 1 Jan $1,100 per Unit per Month paid monthly for 12 months Compounding at 4.00% per year for next 10 years Laundry Entry Choice: $ per Unit x Total No.of Units per Month Quantity: 40 Year 1 Jan $15.00 per Unit x Total No.of Units per Month paid monthly for 12 months Compounding at 5.00% per year for next 10 years Parking Entry Choice: $ per Space per Month Quantity: 50 Year 1 Jan $40.00 per Space per Month paid monthly for 12 months Compounding at 5.00% per year for next 10 years CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 2 Capital Cost Allowance Schedules Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example Building Starting Date: Amount CCA Claim: CCA Method: CCA Rate: First Year Rate: Claim CCA in last Year: Year 1 January $ 3,100,000 Claim CCA up to Taxable Income Building 4.0% 50.0% Yes March 23, 2008 Investor Pro Rental Apartment Building Value of Comencing Improvements Yr. 1 Jan-Yr. 1 Dec $ 3,100,000 Yr. 2 Jan-Yr. 2 Dec Yr. 3 Jan-Yr. 3 Dec Yr. 4 Jan-Yr. 4 Dec Yr. 5 Jan-Yr. 5 Dec Yr. 6 Jan-Yr. 6 Dec Yr. 7 Jan-Yr. 7 Dec Yr. 8 Jan-Yr. 8 Dec Yr. 9 Jan-Yr. 9 Dec Yr. 10 Jan-Yr. 10 Dec Total $ 3,100,000 CCA Avaliable $ 62,000 121,520 116,659 111,993 107,513 103,213 99,084 95,121 91,316 87,663 CCA Claimed $ 62,000 121,520 116,659 111,993 107,513 103,213 99,084 95,121 91,316 87,663 $ 996,082 Undepreciated Balance $ 3,038,000 2,916,480 2,799,821 2,687,828 2,580,315 2,477,102 2,378,018 2,282,897 2,191,581 2,103,918 CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1 Mortgage Schedule Parklane Place 40 Unit Apartment Building Investment Analysis Rental Units Example March 23, 2008 Investor Pro Rental Apartment Building First Mortgage Amount: Type: Analysis Start Date: Mortgage Commences: Payment Frequency: Payment Rounded: Compounding Frequency: Interest Rate: Additional Payment or Borrowing: $3,200,000 Standard Mortgage January Year 1 January Year 1 Monthly Up to Nearest Cent Semi-annually Fixed No Term 1 Start Date of (Balloon) Term Year 1 Jan Time Period Years Months 10 0 Nominal Annual Interest Rate 6.500 % Amortization Years Months 25 0 Outstanding Balance Payout at end of Analysis Period: Dec Year 10 Payout at end of last Term: Dec Year 10 $ $ 2,474,042.43 2,474,042.43 End of Year Accrued Interest - $ - $ Mortgage Payout 2,474,042.43 2,474,042.43 Additional Payment or (Borrowing) - Time Period Year 1 Jan-Year 1 Dec Year 2 Jan-Year 2 Dec Year 3 Jan-Year 3 Dec Year 4 Jan-Year 4 Dec Year 5 Jan-Year 5 Dec Year 6 Jan-Year 6 Dec Year 7 Jan-Year 7 Dec Year 8 Jan-Year 8 Dec Year 9 Jan-Year 9 Dec Year 10 Jan-Year 10 Dec Payment 257,212.44 257,212.44 257,212.44 257,212.44 257,212.44 257,212.44 257,212.44 257,212.44 257,212.44 257,212.44 2,572,124.40 Interest Payment 203,682.63 200,146.65 196,377.11 192,358.54 188,074.54 183,507.55 178,638.89 173,448.59 167,915.48 162,016.85 1,846,166.83 Principal Payment 53,529.81 57,065.79 60,835.33 64,853.90 69,137.90 73,704.89 78,573.55 83,763.85 89,296.96 95,195.59 725,957.57 Outstanding Balance 3,146,470.19 3,089,404.40 3,028,569.07 2,963,715.17 2,894,577.27 2,820,872.38 2,742,298.83 2,658,534.98 2,569,238.02 2,474,042.43 CTA Real Estate Neil Williams 604-897-1563 nwilliams@globalnet.com Disclaimer Statement Page 1