Future Estate - Sydney PROPERTY INVESTMENT CASH FLOW ANALYSIS - FIRST YEAR 16-Jul-2013 Prepared for: Consultant: Property: Nelson Street, Blacks Beach Description: Class B - 2 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
510,000 17,975 20,000 4,344 552,319
100,000 17,500 469,819 I/O (6.00%) 28,189 28,189 469,819
Property Income and Expenditure Rental income Rental expenses Net rental income (rent retained – expenses paid)
82,810 15,435 67,375
Pre-Tax Cash Flow (net rent – loan payments)
39,186
Tax Deductions Cash deductions Loan interest Rental expenses Non-Cash Deductions Depreciation – Building ($204,084 @ 2.50%) Depreciation – Furniture, fixtures & fittings Loan cost write-off ($4,344 over 5 yrs) Total Tax Deductions
28,189 15,435 5,102 15,868 869 65,463
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 82,810 177,810 65,463 112,347 16,550 22,365 -5,815
Annual after-tax surplus (pre-tax cash flow + tax credit) Weekly after-tax surplus
$33,371 $642
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
510,000 17,975 20,000 4,344 $552,319
Purchase Costs Conveyancing costs: Govt. Stamp duty: Total Purchase costs:
2,000 15,975 $17,975
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:
1,409 1,175 940 300 230 115 175 $4,344
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
100,000 17,500 469,819 I/O (6.00%) 28,189 $28,189 469,819
Initial Investment & Loan Amount
Property cost: Renovation costs: Purchase costs: Furniture costs: Loan costs: Additional loan: Totals:
Investment 100,000 0 0 0 0 $100,000
Loan 410,000 0 17,975 20,000 4,344 17,500 $469,819
Total Cost 510,000 0 17,975 20,000 4,344 $552,319
Loan Details Loan type: Interest rate (yr 1) (%) Loan amount($): Loan costs (written off over 5 yrs): Monthly payment: Annual payment:
I/O Yrs 1-40 6.00 $469,819 $4,344 $2,349 $28,189
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)
82,810 16.24% 15,435 67,375 13.21%
Rental Income Rent per week: Potential annual rent: Vacancy rate: Annual rent:
2,275 118,300 30.00% $82,810
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:
8,695 3,640 1,500 800 500 300 15,435 0 $15,435 13.05% 13.21%
PRE-TAX CASH FLOW Item Rental income Rental expenses Loan interest Principal payments Cash investments Pre-tax cash flow (year 1)
Cash Amount 82,810 15,435 28,189 0 0 39,186
TAX DEDUCTIONS Cash deductions Loan interest Rental expenses Non-Cash Deductions Depreciation – Building ($204,084 @ 2.50%) Depreciation – Furniture, fixtures & fittings Loan cost write-off ($4,344 over 5 yrs) Total Tax Deductions
28,189 15,435 5,102 15,868 869 $65,463
Depreciation on the building (Capital allowance) Property value: Depreciable amount: Depreciation allowance rate (%): Depreciation claim:
510,000 204,084 2.50 $5,102
Depreciation of fittings (prime cost method) Item Furniture package General fittings Low-value pool Total
Value 20,000 166,365 18,365 $204,730
Effective Life (yrs) 15.00 15.00 4.00
Depreciation 1,333 11,091 3,443 $15,868
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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 82,810 177,810 65,463 112,347 16,550 22,365 -5,815
AFTER-TAX CASH FLOW Annual after-tax surplus (pre-tax cash flow + tax credit) Weekly after-tax surplus
$33,371 $642
CASH FLOW PROJECTIONS To estimate future cash flows, assumptions have been made with regard to change over time in rental income, rental expenses and taxable income. Rental income is assumed to increase at 4.00% per year from year 1. Rental expenses are assumed to increase at 4.00% per year from year 1.
Cash flow items Rental income Cash invested Principal payments Interest payments Rental expenses Pre-tax cash flow Tax deductions Tax credits After-tax cash After-tax cash flow Cost /(income) per week
Initial 100,000
-100,000
-100,000 -100,000
1yr 82,810 0 0 28,189 15,435 39,186
2yr 86,122 0 0 28,189 16,052 41,881
3yr 89,567 0 0 28,189 16,695 44,684
5yr 96,876 0 0 28,189 18,057 50,630
10yr 117,864 0 0 28,189 21,969 67,706
65,463 -5,815 33,371 33,371 (642)
68,232 -6,109 35,772 35,772 (688)
66,776 -8,210 36,474 36,474 (701)
66,007 -11,796 38,834 38,834 (747)
67,815 -19,732 47,974 47,974 (923)
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($) 200,000
Investment Property Cash Flows
100,000
0
-100,000 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
$82,810 $86,122 $89,567 $93,150 $96,876 $100,751 $104,781 $108,972 $113,331 $117,864 $122,579 $127,482 $132,581 $137,885 $143,400 $149,136 $155,102 $161,306 $167,758 $174,468 $181,447 $188,705 $196,253 $204,103 $212,267
$28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189
$15,435 $16,052 $16,695 $17,362 $18,057 $18,779 $19,530 $20,311 $21,124 $21,969 $22,848 $23,762 $24,712 $25,700 $26,729 $27,798 $28,910 $30,066 $31,269 $32,519 $33,820 $35,173 $36,580 $38,043 $39,565
Pre-tax cash flow $-100,000 $39,186 $41,881 $44,684 $47,599 $50,630 $53,783 $57,062 $60,472 $64,018 $67,706 $71,542 $75,532 $79,680 $83,995 $88,482 $93,149 $98,003 $103,051 $108,300 $113,760 $119,438 $125,343 $131,484 $137,871 $144,513
Tax credit
$-5,815 $-6,109 $-8,210 $-10,056 $-11,796 $-13,815 $-15,317 $-16,759 $-18,227 $-19,732 $-21,285 $-22,892 $-24,539 $-26,247 $-28,303 $-36,784 $-39,465 $-42,253 $-45,152 $-48,168 $-51,303 $-54,563 $-57,955 $-61,481 $-65,149
After-tax cash flow $-100,000 $33,371 $35,772 $36,474 $37,543 $38,834 $39,968 $41,745 $43,713 $45,791 $47,974 $50,257 $52,640 $55,141 $57,748 $60,179 $56,365 $58,538 $60,798 $63,148 $65,592 $68,135 $70,780 $73,529 $76,390 $79,364
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
$28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189 $28,189
$15,435 $16,052 $16,695 $17,362 $18,057 $18,779 $19,530 $20,311 $21,124 $21,969 $22,848 $23,762 $24,712 $25,700 $26,729 $27,798 $28,910 $30,066 $31,269 $32,519 $33,820 $35,173 $36,580 $38,043 $39,565
$43,624 $44,242 $44,884 $45,551 $46,246 $46,968 $47,719 $48,501 $49,313 $50,158 $51,037 $51,951 $52,901 $53,890 $54,918 $55,987 $57,099 $58,255 $59,458 $60,708 $62,009 $63,362 $64,769 $66,232 $67,754
Rent (tenant) $82,810 $86,122 $89,567 $93,150 $96,876 $100,751 $104,781 $108,972 $113,331 $117,864 $122,579 $127,482 $132,581 $137,885 $143,400 $149,136 $155,102 $161,306 $167,758 $174,468 $181,447 $188,705 $196,253 $204,103 $212,267
Tax credit (taxman)
Cash (you)
$-5,815 $-6,109 $-8,210 $-10,056 $-11,796 $-13,815 $-15,317 $-16,759 $-18,227 $-19,732 $-21,285 $-22,892 $-24,539 $-26,247 $-28,303 $-36,784 $-39,465 $-42,253 $-45,152 $-48,168 $-51,303 $-54,563 $-57,955 $-61,481 $-65,149
$-33,371 $-35,772 $-36,474 $-37,543 $-38,834 $-39,968 $-41,745 $-43,713 $-45,791 $-47,974 $-50,257 $-52,640 $-55,141 $-57,748 $-60,179 $-56,365 $-58,538 $-60,798 $-63,148 $-65,592 $-68,135 $-70,780 $-73,529 $-76,390 $-79,364
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