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Ten Year Performance Projection

Desirable Location
Gilbert, AZ 85234
4bd • 3ba • Built: 2005

Projected Income	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Projected Rent	$31,200	$32,136	$33,100	$34,093	$35,116	$36,169	$37,254	$38,372	$39,523	$40,709
Vacancy Losses	($2,496)	($2,571)	($2,648)	($2,727)	($2,809)	($2,894)	($2,980)	($3,070)	($3,162)	($3,257)
Operating Income	$28,704	$29,565	$30,452	$31,366	$32,307	$33,276	$34,274	$35,302	$36,361	$37,452

Estimated Expenses	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Property Taxes	($1,596)	($1,644)	($1,693)	($1,744)	($1,796)	($1,850)	($1,906)	($1,963)	($2,022)	($2,082)
Insurance	($1,197)	($1,233)	($1,270)	($1,308)	($1,347)	($1,388)	($1,429)	($1,472)	($1,516)	($1,562)
Management Fees	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Leasing/Advertising Fees	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Association Fees	($1,200)	($1,236)	($1,273)	($1,311)	($1,351)	($1,391)	($1,433)	($1,476)	($1,520)	($1,566)
Maintenance	($624)	($643)	($662)	($682)	($702)	($723)	($745)	($767)	($790)	($814)
Other	$0	$0	$0	$0	$0	$0	$0	$0	$0	$0
Operating Expenses	($4,617)	($4,756)	($4,898)	($5,045)	($5,196)	($5,352)	($5,513)	($5,678)	($5,849)	($6,024)

Income Analysis	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Net Operating Income	$24,087	$24,810	$25,554	$26,321	$27,110	$27,923	$28,761	$29,624	$30,513	$31,428
- Mortgage Payments	($21,530)	($21,530)	($21,530)	($21,530)	($21,530)	($21,530)	($21,530)	($21,530)	($21,530)	($21,530)
= Cash Flow	$2,557	$3,280	$4,024	$4,791	$5,580	$6,394	$7,231	$8,094	$8,983	$9,898
+ Principal Reduction	$3,675	$3,901	$4,142	$4,398	$4,669	$4,957	$5,262	$5,587	$5,932	$6,297
+ Appreciation	$23,940	$25,376	$26,899	$28,513	$30,224	$32,037	$33,959	$35,997	$38,157	$40,446
= Gross Equity Income	$30,172	$32,558	$35,065	$37,701	$40,473	$43,387	$46,453	$49,678	$53,071	$56,642
Capitalization Rate	5.7%	5.5%	5.4%	5.2%	5.1%	4.9%	4.8%	4.7%	4.5%	4.4%
Cash on Cash Return	2.3%	2.9%	3.6%	4.3%	5.0%	5.7%	6.5%	7.2%	8.0%	8.9%
Return on Equity	23.7%	20.8%	18.7%	17.1%	15.8%	14.8%	14.0%	13.3%	12.7%	12.2%

Loan Analysis	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Market Value	$422,940	$448,316	$475,215	$503,728	$533,952	$565,989	$599,948	$635,945	$674,102	$714,548
- Loan Balance	($295,575)	($291,674)	($287,532)	($283,134)	($278,466)	($273,509)	($268,246)	($262,659)	($256,728)	($250,430)
= Equity	$127,365	$156,643	$187,684	$220,594	$255,486	$292,480	$331,702	$373,286	$417,374	$464,118
Loan-to-Value Ratio	69.9%	65.1%	60.5%	56.2%	52.2%	48.3%	44.7%	41.3%	38.1%	35.0%
Potential Cash-Out Refi	$85,071	$111,811	$140,162	$170,221	$202,091	$235,881	$271,707	$309,691	$349,964	$392,663

Sale Analysis	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Equity	$127,365	$156,643	$187,684	$220,594	$255,486	$292,480	$331,702	$373,286	$417,374	$464,118
- Closing Costs	($29,606)	($31,382)	($33,265)	($35,261)	($37,377)	($39,619)	($41,996)	($44,516)	($47,187)	($50,018)
= Proceeds After Sale	$97,759	$125,260	$154,419	$185,333	$218,110	$252,861	$289,706	$328,770	$370,187	$414,099
+ Cumulative Cash Flow	$2,557	$5,837	$9,861	$14,652	$20,232	$26,626	$33,857	$41,951	$50,934	$60,832
- Approximate Cash Invested	($111,720)	($111,720)	($111,720)	($111,720)	($111,720)	($111,720)	($111,720)	($111,720)	($111,720)	($111,720)
= Net Profit	($11,404)	$19,377	$52,560	$88,265	$126,622	$167,767	$211,843	$259,001	$309,401	$363,212
Internal Rate of Return	-10.2%	8.4%	14.0%	16.1%	17.0%	17.3%	17.3%	17.2%	17.0%	16.8%
Return on Investment	-10.2%	17.3%	47.0%	79.0%	113.3%	150.2%	189.6%	231.8%	276.9%	325.1%

*Information is not guaranteed and investors should do their own research, get professional advice and conduct due diligence prior to investing.

Down payment

The amount you pay upfront.

Purchase price − First loan − Second loan

Approximate cash invested

All the cash you put in at the start.

Down payment + Closing costs + Fix-up costs + Loan fees

Cost per square foot

Helps you compare prices across properties.

Purchase price / Square feet

Rent per square foot

Useful for comparing rental income.

Monthly rent / Square feet

Nominal / Real interest rate

Nominal is the stated interest rate on the loan.

Real approximates the interest rate after inflation.

Real rate = Nominal rate − Projected inflation rate

Vacancy losses

Expected lost rent when the property is empty.

Rent × Vacancy rate (as a percent)

Operating income

Income after accounting for empty periods.

Rent − Vacancy losses

Net operating income (NOI)

Income before mortgage payments.

Operating income − All property expenses (taxes, insurance, management, maintenance, etc.)

Cash flow

What's left after paying the mortgage. Positive means the property pays for itself.

Net operating income − Monthly loan payment

Capitalization rate

A quick way to compare similar properties.

Annual net operating income / Purchase price × 100 → %

Debt coverage ratio

How many times your income covers the mortgage. Above 1.0 means income exceeds the payment.

Net operating income / Monthly mortgage payment

Cash on cash return

Shows how hard your money is working.

Annual cash flow / Cash invested × 100 → %

Return on investment

Total return as a percent of what you invested. We also show versions that include Inflation Induced Debt Destruction^® (IIDD) and tax benefits.

Gross equity income (cash flow + principal + appreciation) / Cash invested × 100 → %

Return on Investment with IIDD

Return on investment including the benefit of inflation reducing the real value of your debt.

Gross equity income including Inflation Induced Debt Destruction^® (IIDD) / Cash invested × 100 → %

Inflation Induced Debt Destruction^® (IIDD)

As inflation happens, the real value of your loan balance goes down.

Projected inflation rate (as a percent) × Total loan amount

Loan fees

Fees charged by the lender for the first and second loans. Spread over the life of the loan for tax purposes.

First loan fees + Second loan fees

Closing costs

One-time costs to buy the property (e.g. title, escrow). Counted in your initial investment and in depreciation for taxes.

Gross rent

Total rental income. Year 1 uses your current rent; later years:

Prior year rent × (1 + Rental growth rate)

Operating expenses

All property expenses. In later years each line grows with inflation (management with rental growth).

Property tax + Insurance + Management + Leasing + Association fees + Maintenance + Other

Principal reduction

The part of your mortgage payment that pays down the loan balance each year (not interest). From the first and second loans combined.

Appreciation

Increase in the property's value from one year to the next. Market value grows at your assumed appreciation rate.

This year's market value − Last year's market value

Gross equity income

The total gain from the property in that year.

Cash flow + Principal paydown + Appreciation

Capitalization rate (10-year)

Uses current value instead of purchase price.

Net operating income / Market value (that year) × 100 → %

Return on equity

Shows how well your equity is performing.

Gross equity income / Equity (market value − loan balance) × 100 → %

Market value

Estimated value each year. Year 1 starts from initial market value.

Prior year's market value × (1 + Appreciation rate)

Loan balance

How much you still owe on the first and second mortgages. It goes down each year as you pay principal.

Equity

Your stake in the property.

Market value − Loan balance

Loan-to-value ratio

Your loan balance as a percent of the property's value. Lower means you own a bigger share.

Loan balance / Market value × 100 → %

Assumptions

This is a projection from our Local Market Specialists. If you would like to set your own assumptions, sign up at PropertyTracker.com and unlock a suite of investment tools.

Potential cash-out refi

Cash you could take out if you refinanced at the rate shown. Positive result means cash out.

(Refinance loan-to-value % × Market value) + Loan balance (loan balance is negative)

Closing costs (sale)

Estimated cost to sell (e.g. agent commission, transfer taxes). Shown as a negative.

Closing cost % × Market value

Proceeds after sale

What you'd receive from selling.

Equity + Closing costs of sale (closing costs are negative)

Cumulative cash flow

Total of all cash flow from year 1 through this year.

Cash flow (year 1) + Cash flow (year 2) + … + Cash flow (this year)

Net profit

If you sold at the end of this year.

Sale proceeds + Cumulative cash flow + Initial cash invested (initial investment is negative)

Internal rate of return (IRR)

An annual return rate that accounts for when you put money in and when you get it back, including the sale. Calculated from your initial investment and the series of cash flows plus sale proceeds in the chosen year. Good for comparing different investments.

Return on investment (sale)

If you sold at the end of this year.

Net profit / Cash invested × 100 → %

Rents received

Total rental income for the year from your tracker. Times your ownership share if applicable.

Rent + Pet fees + Damage credits + Reimbursements + Other income

Depreciation

Tax deduction for the wear and tear on the building. Special rules for the first year and year of sale (mid-month), and for GO Zone.

Basis / Life (years)

Total expenses (Schedule E)

All expenses for the year for Schedule E.

Actual expenses (operating + mortgage interest + loan fee amortization + other) + Depreciation

Net income (or loss)

The number you use for Schedule E on your tax return.

Total income − Total expenses

Amortization of loan fees

Loan fees spread over the life of the loan. Straight-line over the term; special rules for first year and payoff year. You deduct that portion for tax purposes.

Total loan fees / Loan term (years)

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Ten Year Performance Projection