Future Estate - Sydney PROPERTY INVESTMENT CASH FLOW ANALYSIS - FIRST YEAR 16-Jul-2013 Prepared for: Consultant: Property: Nelson Street, Blacks Beach Description: Class A - 1 Bedroom Unit (Retail) 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 Total loan payments Closing loan balance
390,000 13,475 20,000 3,569 427,044
78,000 17,500 366,544 I/O (6.00%) 21,993 21,993 366,544
Property Income and Expenditure Rental income Rental expenses Net rental income (rent retained – expenses paid)
63,700 12,589 51,112
Pre-Tax Cash Flow (net rent – loan payments)
29,119
Tax Deductions Cash deductions Loan interest Rental expenses Non-Cash Deductions Depreciation – Building ($156,780 @ 2.50%) Depreciation – Furniture, fixtures & fittings Loan cost write-off ($3,569 over 5 yrs) Total Tax Deductions
21,993 12,589 3,920 12,668 714 51,882
Tax Credit Calculation Present taxable income Rental income Total income Total deductions New taxable income Present tax New tax Tax credit or rebate
95,000 63,700 158,700 51,882 106,818 16,550 20,432 -3,882
Annual after-tax surplus (pre-tax cash flow + tax credit) Weekly after-tax surplus
$25,237 $485
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
390,000 13,475 20,000 3,569 $427,044
Purchase Costs Conveyancing costs: Govt. Stamp duty: Total Purchase costs:
2,000 11,475 $13,475
Loan Costs Establishment fees (0.30% of loan): Mortgage insurance (0.25% of loan): Mortgagee's solicitor's fees: Valuation fees: Registration of mortgage: Registration of title: Search fees: Total loan costs:
1,100 916 733 300 230 115 175 $3,569
FINANCE Initial cash invested Additional loan (if required) Initial loan amount (total cost + any additional loan – initial cash) Loan type Interest payments Total loan payments Closing loan balance
78,000 17,500 366,544 I/O (6.00%) 21,993 $21,993 366,544
Initial Investment & Loan Amount
Property cost: Renovation costs: Purchase costs: Furniture costs: Loan costs: Additional loan: Totals:
Investment 78,000 0 0 0 0 $78,000
Loan 312,000 0 13,475 20,000 3,569 17,500 $366,544
Total Cost 390,000 0 13,475 20,000 3,569 $427,044
Loan Details Loan type: Interest rate (yr 1) (%) Loan amount($): Loan costs (written off over 5 yrs): Monthly payment: Annual payment:
I/O Yrs 1-40 6.00 $366,544 $3,569 $1,833 $21,993
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)
63,700 16.33% 12,589 51,112 13.11%
Rental Income Rent per week: Potential annual rent: Vacancy rate: Annual rent:
1,750 91,000 30.00% $63,700
Rental Expenses Regular Expenses: Agent's commission (10.50%): 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:
6,688 2,800 1,500 800 500 300 12,589 0 $12,589 13.83% 13.11%
PRE-TAX CASH FLOW Item Rental income Rental expenses Loan interest Principal payments Cash investments Pre-tax cash flow (year 1)
Cash Amount 63,700 12,588 21,993 0 0 29,119
TAX DEDUCTIONS Cash deductions Loan interest Rental expenses Non-Cash Deductions Depreciation – Building ($156,780 @ 2.50%) Depreciation – Furniture, fixtures & fittings Loan cost write-off ($3,569 over 5 yrs) Total Tax Deductions
21,993 12,589 3,920 12,668 714 $51,882
Depreciation on the building (Capital allowance) Property value: Depreciable amount: Depreciation allowance rate (%): Depreciation claim:
390,000 156,780 2.50 $3,920
Depreciation of fittings (prime cost method) Item Furniture package General fittings Low-value pool Total
Value 20,000 118,365 18,365 $156,730
Effective Life (yrs) 15.00 15.00 4.00
Depreciation 1,333 7,891 3,443 $12,668
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
95,000 63,700 158,700 51,882 106,818 16,550 20,432 -3,882
AFTER-TAX CASH FLOW Annual after-tax surplus (pre-tax cash flow + tax credit) Weekly after-tax surplus
$25,237 $485
CASH FLOW PROJECTIONS To estimate future cash flows, assumptions have been made with regard to change over time in rental income, rental expenses and taxable income. Rental income is assumed to increase at 4.00% per year from year 1. Rental expenses are assumed to increase at 4.00% per year from year 1.
Cash flow items Rental income Cash invested Principal payments Interest payments Rental expenses Pre-tax cash flow Tax deductions Tax credits After-tax cash After-tax cash flow Cost /(income) per week
Initial 78,000
-78,000
-78,000 -78,000
1yr 63,700 0 0 21,993 12,588 29,119
2yr 66,248 0 0 21,993 13,092 31,163
3yr 68,898 0 0 21,993 13,616 33,290
5yr 74,520 0 0 21,993 14,727 37,801
10yr 90,665 0 0 21,993 17,917 50,755
51,882 -3,882 25,237 25,237 (485)
54,538 -3,747 27,416 27,416 (527)
52,963 -5,536 27,754 27,754 (534)
51,943 -8,528 29,273 29,273 (563)
53,184 -14,768 35,987 35,987 (692)
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($) 200,000
Investment Property Cash Flows
160,000 120,000 80,000 40,000 0 -40,000 -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
$63,700 $66,248 $68,898 $71,654 $74,520 $77,501 $80,601 $83,825 $87,178 $90,665 $94,292 $98,063 $101,986 $106,065 $110,308 $114,720 $119,309 $124,081 $129,045 $134,206 $139,575 $145,158 $150,964 $157,002 $163,282
$21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993
$12,589 $13,092 $13,616 $14,160 $14,727 $15,316 $15,928 $16,566 $17,228 $17,917 $18,634 $19,379 $20,155 $20,961 $21,799 $22,671 $23,578 $24,521 $25,502 $26,522 $27,583 $28,686 $29,834 $31,027 $32,268
Pre-tax cash flow $-78,000 $29,119 $31,163 $33,290 $35,501 $37,801 $40,192 $42,680 $45,267 $47,957 $50,755 $53,665 $56,691 $59,839 $63,112 $66,516 $70,056 $73,738 $77,567 $81,550 $85,692 $89,999 $94,479 $99,137 $103,983 $109,022
Tax credit
$-3,882 $-3,747 $-5,536 $-7,107 $-8,528 $-10,178 $-11,368 $-12,484 $-13,614 $-14,768 $-15,955 $-17,181 $-18,432 $-19,729 $-21,077 $-26,377 $-28,501 $-30,710 $-33,007 $-35,397 $-37,881 $-40,464 $-43,152 $-45,946 $-48,852
After-tax cash flow $-78,000 $25,237 $27,416 $27,754 $28,394 $29,273 $30,014 $31,312 $32,783 $34,343 $35,987 $37,710 $39,510 $41,407 $43,383 $45,439 $43,679 $45,237 $46,857 $48,543 $50,295 $52,118 $54,015 $55,985 $58,037 $60,170
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
$21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993 $21,993
$12,589 $13,092 $13,616 $14,160 $14,727 $15,316 $15,928 $16,566 $17,228 $17,917 $18,634 $19,379 $20,155 $20,961 $21,799 $22,671 $23,578 $24,521 $25,502 $26,522 $27,583 $28,686 $29,834 $31,027 $32,268
$34,581 $35,085 $35,608 $36,153 $36,719 $37,308 $37,921 $38,558 $39,221 $39,910 $40,627 $41,372 $42,147 $42,953 $43,792 $44,664 $45,571 $46,514 $47,495 $48,515 $49,576 $50,679 $51,826 $53,020 $54,261
Rent (tenant) $63,700 $66,248 $68,898 $71,654 $74,520 $77,501 $80,601 $83,825 $87,178 $90,665 $94,292 $98,063 $101,986 $106,065 $110,308 $114,720 $119,309 $124,081 $129,045 $134,206 $139,575 $145,158 $150,964 $157,002 $163,282
Tax credit (taxman)
Cash (you)
$-3,882 $-3,747 $-5,536 $-7,107 $-8,528 $-10,178 $-11,368 $-12,484 $-13,614 $-14,768 $-15,955 $-17,181 $-18,432 $-19,729 $-21,077 $-26,377 $-28,501 $-30,710 $-33,007 $-35,397 $-37,881 $-40,464 $-43,152 $-45,946 $-48,852
$-25,237 $-27,416 $-27,754 $-28,394 $-29,273 $-30,014 $-31,312 $-32,783 $-34,343 $-35,987 $-37,710 $-39,510 $-41,407 $-43,383 $-45,439 $-43,679 $-45,237 $-46,857 $-48,543 $-50,295 $-52,118 $-54,015 $-55,985 $-58,037 $-60,170
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