Rental analysis of the purchase of a housing estate in the Republic of Ireland

1. F E A S I B I L I T Y S T U D Y
R E N T A L A N A L Y S I S

2. J O H N W A L S H
PROJECT
The purchase of 46 housing units in an
Irish City for the mixed purpose of sale
and rental.
3 partners with experience in con-
struction and residential rental prop-
erties - particularly in the Dublin and
Galway areas.
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3. MAJOR CHARACTERISTICS
Purchase Price - €350,000
Total Acquisition Costs - €390,750
Construction Upgrade - €198,149
Planning Contributions - €297,000
Part 5 Contributions - Nil
Gross Rental Income - €320,400
Sale of 4 number Detached Units - Total €400,000
Own Financing - €100,000
Built Area - 47,019 ft²
46HousingUnits
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4. All properties are close to a completion
with 3 number units occupied . Minor
internal fit-out required to all with some
external hard landscaping outstanding.
General Overview
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5. RENT ASSUMPTIONS RESIDENTIAL PROFORMA

6. 12/04/2015
Housing Scheme
xxx,
SCENARIO #: 1 - BASE CASE
ACQUISITION & DEVELOPMENT COSTS
Unit of Total PSF
Item Measure Unit Cost Cost Cost
Acquisition
1 Purchase Price N/A N/A 350,000€ 7.44€
4 Legal Fees N/A N/A 12,500€ 0.27€
5 Due Diligence N/A N/A 10,000€ 0.21€
6 Other N/A N/A 4,500€ 0.10€
7 Brokers Commission Plus Bonus % of purchase price 2.5% 13,750€ 0.29€
8 Total Acquisition Costs 390,750€ 8.31€
Hard Costs (Construction)
9 House Renovation / Completion €/sf of Houses 3.00€ 141,057€ 3.00€
11 Contingency % of Hard Costs 10.0% 14,106€ 0.30€
12 Total Hard Costs 155,163€ 3.30€
Soft Costs (Construction)
16 Development Fees/Bonds N/A N/A 1,500€ 0.03€
21 Insurance (during construction) N/A N/A 2,500€ 0.05€
23 Contingency % of Soft Costs 10.0% 400€ 0.01€
24 Total Soft Costs 4,400€ 0.09€
Site Costs (Hard/Soft)
25 Site Costs N/A N/A 25,000€ 0.53€
30 Contingency % of Site Costs 10.0% 2,500€ 0.05€
31 Total Site Costs 27,500€ 0.58€
Financing Costs
32 Appraisal N/A N/A 1,000€ 0.02€
33 Legal - Loan N/A N/A 500€ 0.01€
34 Interest on Construction Loan from Financing Schedule N/A 9,586€ 0.20€
37 Contingency % of Financing Costs 5.0% 554€ 0.01€
38 Total Financing Costs 11,641€ 0.25€
39 Planning Contribution Treated in Cash Flow 0.0% -€ -€
40 **Total Acquisition & Development Costs** 589,453€ 12.54€
NOTES
HousingScheme
xxx,
SCENARIO#:1-BASECASE
FINANCINGASSUMPTIONS
AmortizationScheduleofOwnFinancingAmortizationScheduleofPermanentLoan
Rate8.00%
Points(%)0.00%AmountofOwnFinancing100,000€AcquisitionCosts390,750€
Term(mo)6.0DevelopmentCosts198,703€
Equity(%)0.0%TotalProjectCosts589,453€
LoanAmount479,313€Less:Saleof4Houses400,000-€
Less:SellerFinancing100,000-€
Points(€)-€LoanAmount89,453€
TotalInterest9,586€
OwnFinancingYearPrincipalInterestPaymentBalanceYearPrincipalInterestPaymentBalance
Rate4.50%165,915€3,152€69,067€34,085€16,568€5,621€12,189€82,886€
Points(%)0.00%234,085€449€34,533€-€27,007€5,181€12,189€75,878€
Term(yr)1.53-€-€-€-€37,477€4,712€12,189€68,402€
4-€-€-€-€47,977€4,211€12,189€60,424€
MonthlyPayment5,756€5-€-€-€-€58,512€3,677€12,189€51,912€
Points(€)-€6-€-€-€-€69,082€3,107€12,189€42,831€
7-€-€-€-€79,690€2,499€12,189€33,141€
PermanentLoan8-€-€-€-€810,339€1,850€12,189€22,802€
Rate6.50%9-€-€-€-€911,031€1,157€12,189€11,770€
Points(%)0.00%10-€-€-€-€1011,770€419€12,189€0€
Term(yr)10.03,600€32,434€
Equity(%)0.0%
MonthlyPayment1,016€
Points(€)-€
MISCOTHERASSUMPTIONS
Investors/ManagerDistributions
CapRateofYear11PretaxCashFlow5.0%
CumulativePreferredReturnRate0.0%TransactionCosts(asa%ofSalesPrice)2.5%
SplitoverPreferredReturn:
AllEquityMembers100.0%
Manager0.0%
EquitySplit(aboveinitialinvestment)
AllEquityMembers100.0%
Manager0.0%
ConstructionLoan
AssumptiononSaleofPropertyinYear10
ACQUISITION & DEVELOPMENT COSTS FINANCING ASSUMPTIONS

7. Housing Scheme
xxx,
SCENARIO #: 1 - BASE CASE
CASH FLOW ANALYSIS
Year Year Year Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7 8 9 10
Transaction Costs
1 Acquisition Costs 390,750-€
2 Hard/Soft Costs 198,703-€
3 Sales Price in Yr 10 5,375,266€
4 Less: Transaction costs in Yr 10 134,382-€
5 Historic Tax Credits -€
6 Total Transaction Costs 589,453-€ -€ -€ -€ -€ -€ -€ -€ -€ -€ 5,240,884€
Gross Rental Income
7 Houses 320,400€ 326,808€ 333,344€ 340,011€ 346,811€ 353,747€ 360,822€ 368,039€ 375,400€ 382,908€
8 -€ -€ -€ -€ -€ -€ -€ -€ -€ -€
9 Total Gross Rental Income 320,400€ 326,808€ 333,344€ 340,011€ 346,811€ 353,747€ 360,822€ 368,039€ 375,400€ 382,908€
Less: Adjustments to GRI
10 Houses - Vacancy/Bad Debt 22,428-€ 22,877-€ 23,334-€ 23,801-€ 24,277-€ 24,762-€ 25,258-€ 25,763-€ 26,278-€ 26,804-€
11 Houses - Maintenance Concessions 7,200-€ 7,344-€ 7,491-€ 7,641-€ 7,794-€ 7,949-€ 8,108-€ 8,271-€ 8,436-€ 8,605-€
12 Planning Contributions 49,000-€ 99,000-€ 99,000-€ 50,000-€ -€ -€ -€ -€ -€ -€
13 Total Adjustments to GRI 78,628-€ 129,221-€ 129,825-€ 81,441-€ 32,070-€ 32,712-€ 33,366-€ 34,033-€ 34,714-€ 35,408-€
14 Net Rental Income 241,772€ 197,587€ 203,519€ 258,570€ 314,741€ 321,036€ 327,456€ 334,006€ 340,686€ 347,499€
15 Houses Other Income 12,600€ 12,852€ 13,109€ 13,371€ 13,639€ 13,911€ 14,190€ 14,473€ 14,763€ 15,058€
19 Total Income 254,372€ 210,439€ 216,628€ 271,941€ 328,380€ 334,947€ 341,646€ 348,479€ 355,449€ 362,558€
Operating Expenses
20 Houses Operating Expenses 54,010€ 55,090€ 56,192€ 57,316€ 58,462€ 59,631€ 60,824€ 62,041€ 63,281€ 64,547€
21 -€ -€ -€ -€ -€ -€ -€ -€ -€ -€
22 Total Operating Expenses 54,010€ 55,090€ 56,192€ 57,316€ 58,462€ 59,631€ 60,824€ 62,041€ 63,281€ 64,547€
23 Net Operating Income 200,362€ 155,349€ 160,436€ 214,625€ 269,917€ 275,316€ 280,822€ 286,439€ 292,167€ 298,011€
Reserves
24 House Reserves 28,883€ 29,460€ 30,049€ 30,650€ 31,263€ 31,889€ 32,526€ 33,177€ 33,840€ 34,517€
25 -€ -€ -€ -€ -€ -€ -€ -€ -€ -€
26 Total Reserves 28,883€ 29,460€ 30,049€ 30,650€ 31,263€ 31,889€ 32,526€ 33,177€ 33,840€ 34,517€
27 Pretax Cash Flow Before Financing 589,453-€ 171,480€ 125,889€ 130,387€ 183,975€ 238,654€ 243,427€ 248,296€ 253,262€ 258,327€ 5,504,377€
28 Return on Investment 29.1% 21.4% 22.1% 31.2% 40.5% 41.3% 42.1% 43.0% 43.8% 933.8%
29 Internal Rate of Return (IRR) 40.6%
NPV Calculations
30 @ Following Rates ->> 5.0% 7.0% 8.0% 10.0% 15.0%
31 Net Present Value 4,013,602€ 3,271,590€ 2,955,868€ 2,415,441€ 1,460,720€
Financing
32 Proceeds from Own Financing 100,000€
33 Proceeds from Permanent Loan 89,453€
34 Own Financing Debt Service 69,067-€ 34,533-€ -€ -€ -€ -€ -€ -€ -€ -€
35 Permanent Loan Debt Service 12,189-€ 12,189-€ 12,189-€ 12,189-€ 12,189-€ 12,189-€ 12,189-€ 12,189-€ 12,189-€ 12,189-€
36 Loan Balance in Yr 10 0-€
37 Pretax Cash Flow After Financing 400,000-€ 90,224€ 79,167€ 118,198€ 171,786€ 226,465€ 231,238€ 236,107€ 241,073€ 246,138€ 5,492,189€
38 Return on Equity 22.6% 19.8% 29.5% 42.9% 56.6% 57.8% 59.0% 60.3% 61.5% 1373.0%
39 Leveraged IRR 45.6%
40 Loan-to-Value Ratio (LTV; permanent loan only) 15.2%
41 Loan-to-Value Ratio (LTV; all loans) 32.1%
42 Debt Coverage Ratio (DCR) 8.40 7.50 10.70 15.09 19.58 19.97 20.37 20.78 21.19 451.60
CASH FLOW ANALYSIS

8. F E A S I B I L I T Y S T U D Y
R E N T A L A N A L Y S I S
C O N T A C T D E T A I L S
John Walsh: Phone: 087-9767485 Email: johnmartinwalsh@gmail.com Address: 88 Coill Tire, Doughiska, Galway City