College Real Estate Investment Analysis Presentation
1. Overview of Presentation Overview of Buyer Assumptions Description of Property (Pictures, Floor Plan, Neighborhood, Amenities, Surrounding Businesses) Supply & Demand Factors Valuation of Property Mortgage Leasing Sale of Property Cash Flows (Before & After Tax) Return Characteristics Conclusion References
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4. 1045 Irwin Pl Tucson, AZ 85719 Description of Property Asking Price: $319,000 | Year Built: 2007 Type: Single Family | Beds: 3 | Baths: 2.5 | SqFt: 1,525 sq ft | Lot Size: 1920sf
16. Supply and Demand: Local “ Let’s remember that real estate markets are local and Tucson’s dynamic economic climate and a ‘pent up buyer demand’ lends itself to a stabilized, then healthy and growing market in 2008.” -Judy Lowe, 2007 MLS President
17. Valuation of Property Comparables Approach – Proximity of Properties: Comparable 1 Comparable 2 Comparable 3
18. Valuation of Property Comparables Approach: Comparable 1: 3936 N Placita La Vina, Tucson, AZ 85719 3 Beds, 2.75 baths, 1,582 sq ft, Built in 1999 Sold for: $300,000 Comparable 2 : 1562 E Painted Colt Loop, Tucson, AZ 85719 3 beds, 2.75 baths, 1,612 sq ft, Condo, Built in 1996 Sold for: $285,000 Comparable 3 : 4255 N Rillito Creek Pl, Tucson, AZ 85719 3 beds, 3.0 baths, 1,758 sq ft; Built in 1994 Sold for: $319,500 Average Price Per Square Foot: $182.72
19. Valuation of Property Comparables Approach For Investment Property: Using average price per square foot as basis, we adjusted accordingly: Avg. Price Sq Ft.: $182.72 + New construction premium; pristine condition: $18.00 + Numerous Upgrades (porcelain tile, granite counter tops, etc.) $10.00 + Energy efficiency upgrades $2.00 - Half Bath vs. Full Bathroom $6.90 ________ Investment Property Price Per Square Foot $205.82 Comparable Valuation Price: $313,876 Source: National Association of Home Builders
20. Valuation of Property NOI Approach For Investment Property: Using the NOI approach, we calculated the value of the property as seen below: NOI Valuation Price: $361,237 *Cap Rate: 5.44% *
30. Return Characteristics (Cap Rate) Going-In Cap Rate = 1 st Year NOI / Purchase Price $16,820 / $309,000 5.44%
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32. 267476.89 / (1.1767)^10 = 52556.78 52556.78 / 61800 = 0.85 227148 / (1.1815)^10 = 42852.06 42852.06 / 61800 = 0.70 30 yr Fixed 6% JP Morgan 30 yr Fixed I/O 6% American Lending Sale of Building = 85% Cash Flows = 15% Sale of Building = 70% Cash Flows = 30% Partitioning the IRR = Less Risky
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34. References Mortgages : www.bankrate.com, JP Morgan Chase (Mike Takacs – Loan Officer) Rental Property : http://www.realestate.com/Property/6829676-1045-Irwin-Pl-Tucson-AZ-85719-20800407.aspx http://www.realestate.com/axx/applications/cob/asp/NSHomeView.asp?homeid=30211889 Realtor : Vicki Locatelli; 520-247-6000 Tucson and U of A demographics : http://www.union.arizona.edu/csil/csa/ , http://en.wikipedia.org/wiki/Tucson,_Arizona#Demographics Labor force and employment : http://www.city-data.com/us-cities/The-West/Tucson-Economy.html Tucson real estate market analysis : http://www.michaelkrotchie.com/blog/tucson-real-estate-market-may-2007-analysis/ Tucson economic overview PDF : Economic and Business Research Program, Karl Eller Graduate School of Management, College of Business and Public Administration, The University of Arizona MTLUS PDF : Prepared for Pima County Real Estate Research Council, Inc. by The University of Arizona Office of Economic Development, November 14, 2007 MLS 07 year end market stats PDF : Copyright 2008 Tucson Association of REALTORS® Multiple Listing Service, Inc. John Burns national market housing review power point : John Burns, Real Estate Consulting, [email_address] NAHB: http://www.nahb.org/generic.aspx?genericContentID=62422
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