Ottawa Real Estate Investors Organization

Hello.

As I mentioned at the last OREIO meeting, I am making my Aylmer Rehab available to an investor. Can someone please take a look at the numbers. The returns seem very high and I cannot figure out if I have made a calculation error or not.

When I originally calculated returns, I found a 9.7 cash on cash return. I then figured avg mortgage paydown of 2.8% (1/35th per year) and modest 3% appreciation. *** BUT *** That is on the entire purchase price. When I calculate figured based on the actual cash invested (and use the actual dollar amount paid off and the appreciation over a 3 year period), I come up with a very different number. I don't want to mislead anyone. So if someone notices that I did something wrong, please point it out to me.

Thanks
- Babette

541 Gordon Street - Investment Property

== Cashflow Analysis ==

Price: $164,900
Initial : Cash Outlay : $11325
...... Down 5% : $8,245.00 / Closing Costs Est : $1,500.00 / Welcome Tax : $,400.00)

Monthly Income : $989
Carrying Costs : $897
......Mortgage - 4.5%, 35yr amort = $737.00 PLUS Taxes : $160.00
Monthly Cashflow : $92 ( = $989 - $897 )

Annual Cashflow : $1104
Annual Cash on Cash Return : 9.7% ( = $1104/11325)

Total Earnings Over 3 years : $29,110
Average Annual Earnings over 3 years : $9703 ( =-$29,110 / 3 )
.....3 year Cash Flow : $3312 ($1104 * 3)
.....Principal Paydown : $10,957
.....Modest Appreciation : $14841 (3% / year avg)

Avg Rate of Return over 3 years : 85% ( = $9703 / $11325 )

As I am looking for a quick close, I am willing to do a vendor take back to help the purchaser.