Future Estate - Sydney PROPERTY INVESTMENT CASH FLOW ANALYSIS - FIRST YEAR 25-Sep-2012 Prepared for: Consultant: Property: Description: Investment Cost Purchase price Purchase costs Furniture package Loan costs Total investment cost Loan Details Initial cash invested Additional loan (if required) Initial loan amount (total cost + any additional loan – cash invested) Loan type Interest payments Principle payments Total loan payments Closing loan balance
400,000 14,425 17,500 3,686 435,611
80,000 17,500 373,111 P&I (6.50%) 24,071 6,160 30,231 366,950
Property Income and Expenditure Rental income Rental expenses Net rental income (rent retained – expenses paid)
64,155 11,679 52,476
Pre-Tax Cash Flow (net rent – loan payments)
22,245
Tax Deductions Cash deductions Loan interest Rental expenses Non-Cash Deductions Depreciation – Building ($200,000 @ 2.50%) Depreciation – Furniture, fixtures & fittings Loan cost write-off ($3,686 over 5 yrs) Total Tax Deductions
24,071 11,679 5,000 9,233 737 50,720
Tax Credit Calculation Present taxable income Rental income Total income Total deductions New taxable income Present tax New tax Tax credit or rebate
100,000 64,155 164,155 50,720 113,435 26,447 31,619 -5,172
Annual after-tax surplus (pre-tax cash flow + tax credit) Weekly after-tax surplus
$17,073 $328
Disclaimer: Note that the computer projections listed above simply illustrate the outcome calculated from the input values and the assumptions contained in the model. Hence the figures can be varied as required and are in no way intended to be a guarantee of future performance. Although the information is provided in good faith, it is also given on the basis that no person using the information, in whole or in part, shall have any claim against Future Estate - Sydney, its servants, employees or consultants..
Future Estate - Sydney
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Tabulated breakdown of items contributing to first year cash flow INVESTMENT COST Purchase price Purchase costs Furniture package Loan costs Total investment cost
400,000 14,425 17,500 3,686 $435,611
Purchase Costs Conveyancing costs: Govt. Stamp duty: Total Purchase costs:
2,000 12,425 $14,425
Loan Costs Establishment fees (0.50% of loan): Mortgagee's solicitor's fees: Valuation fees: Registration of mortgage: Registration of title: Search fees: Total loan costs:
1,866 1,000 300 230 115 175 $3,686
FINANCE Initial cash invested Additional loan (if required) Initial loan amount (total cost + any additional loan – initial cash) Loan type Interest payments Principle payments Total loan payments Closing loan balance
80,000 17,500 373,111 P&I (6.50%) 24,071 6,160 $30,231 366,950
Initial Investment & Loan Amount
Property cost: Renovation costs: Purchase costs: Furniture costs: Loan costs: Additional loan: Totals:
Investment 80,000 0 0 0 0 $80,000
Loan 320,000 0 14,425 17,500 3,686 17,500 $373,111
Total Cost 400,000 0 14,425 17,500 3,686 $435,611
Loan Details Loan type: Interest rate (yr 1) (%) Loan amount($): Loan costs (written off over 5 yrs): Monthly payment: Annual payment:
P&I Yrs 1-25 6.50 $373,111 $3,686 $2,519 $30,231
Future Estate - Sydney
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PROPERTY INCOME & EXPENDITURE Rental income Gross yield (rental income/property value) Rental expenses Net rental income (rent retained – expenses paid) Net yield (net rental income/property value)
64,155 16.04% 11,679 52,476 13.12%
Rental Income Rent per week: Potential annual rent: Vacancy rate: Annual rent:
1,645 85,540 25.00% $64,155
Rental Expenses Regular Expenses: Agent's commission (10.91%): Letting Fees: Rates: Insurance: Maintenance: Other expenses: Total regular expenses: Special expenses: Total expenses: Regular expenses as % of annual rent: Net yield or Capitalisation rate:
7,000 1,579 1,500 800 500 300 11,679 0 $11,679 13.65% 13.12%
PRE-TAX CASH FLOW Item Rental income Rental expenses Loan interest Principal payments Cash investments Pre-tax cash flow (year 1)
Cash Amount 64,155 11,679 24,071 6,160 0 22,245
TAX DEDUCTIONS Cash deductions Loan interest Rental expenses Non-Cash Deductions Depreciation – Building ($200,000 @ 2.50%) Depreciation – Furniture, fixtures & fittings Loan cost write-off ($3,686 over 5 yrs) Total Tax Deductions
24,071 11,679 5,000 9,233 737 $50,720
Depreciation on the building (Capital allowance) Property value: Depreciable amount: Depreciation allowance rate (%): Depreciation claim:
400,000 200,000 2.50 $5,000
Depreciation of fittings (annual claim) Total value Depreciation claim in first year
$200,000 $9,233
Future Estate - Sydney
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TAX CREDIT CALCULATION Present taxable income Rental income Total income Total deductions New taxable income Present tax New tax Tax credit or rebate
100,000 64,155 164,155 50,720 113,435 26,447 31,619 -5,172
AFTER-TAX CASH FLOW Annual after-tax surplus (pre-tax cash flow + tax credit) Weekly after-tax surplus
$17,073 $328
CASH FLOW PROJECTIONS To estimate future cash flows, assumptions have been made with regard to change over time in rental income, rental expenses and taxable income. Rental income is assumed to increase at 2.00% per year from year 1. Rental expenses are assumed to increase at 2.00% per year from year 1.
Cash flow items Rental income Cash invested Principal payments Interest payments Rental expenses Pre-tax cash flow Tax deductions Tax credits After-tax cash After-tax cash flow Cost /(income) per week
Initial 80,000
-80,000
-80,000 -80,000
1yr 64,155 0 6,160 24,071 11,679 22,245
2yr 65,438 0 6,573 23,658 11,913 23,294
3yr 66,747 0 7,013 23,218 12,151 24,365
5yr 69,443 0 7,984 22,247 12,642 26,570
10yr 76,671 0 11,040 19,191 13,958 32,482
50,720 -5,172 17,073 17,073 (328)
50,883 -5,604 17,690 17,690 (340)
49,840 -6,509 17,856 17,856 (343)
48,199 -8,179 18,391 18,391 (354)
44,366 -12,437 20,045 20,045 (385)
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($) 80,000
Investment Property Cash Flows
48,000
16,000
-16,000
-48,000
-80,000 0
5
10
15
20
25
Year from purchase Pre-tax
After-tax
Cash flow projections over 25 years Year
1yr 2yr 3yr 4yr 5yr 6yr 7yr 8yr 9yr 10yr 11yr 12yr 13yr 14yr 15yr 16yr 17yr 18yr 19yr 20yr 21yr 22yr 23yr 24yr 25yr
Rental income
Loan payments
Rental expenses
$64,155 $65,438 $66,747 $68,082 $69,443 $70,832 $72,249 $73,694 $75,168 $76,671 $78,205 $79,769 $81,364 $82,991 $84,651 $86,344 $88,071 $89,832 $91,629 $93,462 $95,331 $97,238 $99,182 $101,166 $103,189
$30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231 $30,231
$11,679 $11,913 $12,151 $12,394 $12,642 $12,895 $13,153 $13,416 $13,684 $13,958 $14,237 $14,522 $14,812 $15,108 $15,410 $15,719 $16,033 $16,354 $16,681 $17,014 $17,355 $17,702 $18,056 $18,417 $18,785
Pre-tax cash flow $-80,000 $22,245 $23,294 $24,365 $25,457 $26,570 $27,706 $28,865 $30,047 $31,253 $32,482 $33,736 $35,016 $36,321 $37,652 $39,009 $40,394 $41,807 $43,248 $44,717 $46,216 $47,745 $49,305 $50,895 $52,518 $54,173
Tax credit
$-5,172 $-5,604 $-6,509 $-7,360 $-8,179 $-9,261 $-10,050 $-10,839 $-11,632 $-12,437 $27,951 $-16,395 $-17,222 $-18,080 $-19,069 $-20,400 $-21,780 $-23,210 $-24,696 $-26,237 $-27,838 $-29,503 $-31,234 $-33,033 $-34,908
After-tax cash flow $-80,000 $17,073 $17,690 $17,856 $18,097 $18,391 $18,445 $18,815 $19,208 $19,621 $20,045 $61,687 $18,621 $19,099 $19,572 $19,940 $19,994 $20,027 $20,038 $20,021 $19,979 $19,907 $19,802 $19,661 $19,485 $19,265
Future Estate - Sydney
Page 6 Who pays the cost (1st year)?
100% Tenant
Projections over 25 years Year
1yr 2yr 3yr 4yr 5yr 6yr 7yr 8yr 9yr 10yr 11yr 12yr 13yr 14yr 15yr 16yr 17yr 18yr 19yr 20yr 21yr 22yr 23yr 24yr 25yr
Interest costs
Rental expenses
Total cost
$24,071 $23,658 $23,218 $22,748 $22,247 $21,712 $21,142 $20,533 $19,884 $19,191 $18,451 $17,662 $16,821 $15,923 $14,964 $13,942 $12,851 $11,687 $10,445 $9,120 $7,706 $6,197 $4,588 $2,870 $1,038
$11,679 $11,913 $12,151 $12,394 $12,642 $12,895 $13,153 $13,416 $13,684 $13,958 $14,237 $14,522 $14,812 $15,108 $15,410 $15,719 $16,033 $16,354 $16,681 $17,014 $17,355 $17,702 $18,056 $18,417 $18,785
$35,750 $35,571 $35,369 $35,142 $34,889 $34,607 $34,295 $33,949 $33,568 $33,148 $32,688 $32,184 $31,633 $31,031 $30,375 $29,660 $28,884 $28,041 $27,126 $26,134 $25,061 $23,899 $22,644 $21,287 $19,823
Rent (tenant) $64,155 $65,438 $66,747 $68,082 $69,443 $70,832 $72,249 $73,694 $75,168 $76,671 $78,205 $79,769 $81,364 $82,991 $84,651 $86,344 $88,071 $89,832 $91,629 $93,462 $95,331 $97,238 $99,182 $101,166 $103,189
Tax credit (taxman)
Cash (you)
$-5,172 $-5,604 $-6,509 $-7,360 $-8,179 $-9,261 $-10,050 $-10,839 $-11,632 $-12,437 $27,951 $-16,395 $-17,222 $-18,080 $-19,069 $-20,400 $-21,780 $-23,210 $-24,696 $-26,237 $-27,838 $-29,503 $-31,234 $-33,033 $-34,908
$-23,233 $-24,263 $-24,869 $-25,579 $-26,375 $-26,964 $-27,904 $-28,906 $-29,968 $-31,086 $-73,467 $-31,190 $-32,509 $-33,880 $-35,207 $-36,284 $-37,407 $-38,582 $-39,807 $-41,090 $-42,432 $-43,835 $-45,305 $-46,846 $-48,458
Future Estate - Sydney
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(%)
Who pays the costs (10 years)
100.00 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 0
1
2
3
4
5
6
7
8
Year from purchase Tenant (100%) Taxman (0%) You (0%)
Average contribution (10 years)
100% Tenant
9
10