Real estate case 4 final v2

real estate

1. 539 E 87 th Street Upper East Side Residential Tajdid Ajman Nan Chen Yannylbis Jimenez Alex Xing Liu Sze Nga Yip

2. The Property - Description Property Summary Property Description Upper Eastside Residential Apartment Building Address: 539 E 87th Street Stories: 5 Block: 1584 Lot: 20 Lot Size: 25’ x 100.67 ’ Gross Sq. Footage: 9,840 SF ( irr . approx .) Lot Area: 2,517 SF (approx .) Zoning: R8B FAR: 4.0 Buildable Square Feet: 10,068 SF (approx.) Air Rights Remaining: 228 (approx. Subject to Sliver Law ) The property is a five (5) story apartment building located on the North side of East 87 th Street between York and East End Avenue. The building contains ten (10) residential units of which 2 are garden duplexes and 8 are 3 bedroom and 2 bath. All units are Free Market. The exterior has been substantially renovated and the interior was gutted and rebuilt. The highlights of each unit includes: extra high ceilings, oversized solid doors, and oak strip flooring A/C window units all aluminum kitchen appliances exposed brick walls, thermo pane windows, and marble window sills countertops and bathrooms dental crown molding, and recessed lighting a washer and dryer boiler and hot water tank updated security system Photo

3. The Property - Photos Entrance Kitchen Living Room Bathroo m

4. The Property - Photos Amenities (Unit with Washer and Dryer) Stairs Interior Floor Plan with Garden

5. The Property - Location Regional Map

6. The Property - Location Local Map

7. The Property - Location Easy Access to Mass Transit Some nearby transportation hubs include: The FDR Drive, which is about 1 block away. E. 90 th Street Ferry Terminal which can take you to Wall Street and other ports along the east river. The 4, 5 and 6 trains are situated about 5 blocks away. Nearby buses within a 2 block radius includes the M80, M86, M31 and the M15 SBS . The location shows promise as it is also located close to the Gracie Mansion and nearby Carl Schurz Park. Aerial Map

8. The Property – Market The Market Economy New York , NY United States Unemployment Rate 8.90% 8.60% Recent Job Growth 0.47% 0.35% Future Job Growth 32.04% 32.10% Sales Taxes 8.88% 5.00% Income Taxes 10.12% 4.70% Income per Cap. $88,698 $26,154 Household Income $90,363 $50,935 Population by Occupation New York, NY United States Management, Business, and Financial Operations 29.10% 14.04% Professional and Related Occupations 37.84% 20.61% Service 6.53% 14.45% Sales and Office 23.45% 26.75% Farming, Fishing, and Forestry 0.00% 0.70% Construction, Extraction, and Maintenance 1.17% 9.42% Production, Transportation, and Material Moving 1.90% 14.05%

9. The Property – Demographics Demographics Household Income Distribution L ocal households have the greatest percentages of income distribution over 50K. Household incomes over 200K are common in the area at 15.4%,which is the second highest in income distribution within the area. The income distribution assures owners that rents will be paid on time.

10. The Property – Community School District Household Income Distribution Education The majority of the community is well educated as most have Bachelors and/or Graduate Degrees. The school district is one of the best in New York with an average rating of 8.2 out of 10. Schools in the community will definitely attract tenants as education is an important factor when looking for a place to live.

11. Rent Roll Rent Roll Unit Tenant Sq. Ft. Lease Exp. Rent (monthly) Rent (annually) 1E 1 1,789 8/31/13 $4,600.00 $55,200.00 1W 2 9/30/13 $4,600.00 $55,200.00 2F 3 1,789 12/31/12 $4,150.00 $49,800.00 2R 4 7/14/13 $4,400.00 $52,800.00 3F 5 1,789 5/31/13 $4,100.00 $49,200.00 3R 6 8/31/13 $4,200.00 $50,400.00 4F 7 1,789 8/31/13 $4,150.00 $49,800.00 4R 8 7/31/13 $4,033.00 $48,396.00 5F 9 1,789 8/31/13 $4,100.00 $49,200.00 5R 10 10/31/12 $3,950.00 $47,400.00 Total 8,945 $42,283.00 $507,396.00 Before expenses, the property should bring in a rent revenue of $507,396.00. The rent is expected to increase 3% per year with a CPI Inflation rate of 2%. As the rent is expected to increase, the rent revenue will also increase and this will be ideal for the owner and investors. As revenue increases and expenses stay more or less the same, the amount borrowed from investors and their expected returns shall be reimbursed immediately. Property Rent Roll

12. Financials   Annual Pro Forma Operational Cash Flow Year: 1 2 3 4 5 6 7 8 9 10 11 Revenues Rent Revenue $507,396 $522,618 $538,296 $554,445 $571,079 $588,211 $605,857 $624,033 $642,754 $662,037 $681,898 Vacancies Rate(5 %) $ 25,370 $ 26,131 $ 26,915 $ 27,722 $ 28,554 $ 29,411 $ 30,293 $ 31,202 $ 32,138 $ 33,102 $ 34,095 Effective Gross Income $482,026 $496,487 $511,382 $526,723 $542,525 $558,800 $575,564 $592,831 $610,616 $628,935 $647,803 Expenses Water & Sewer $5,000 $5,100 $5,202 $5,306 $5,412 $5,520 $5,631 $5,743 $5,858 $5,975 $6,095 Insurance $8,574 $8,745 $8,920 $9,099 $9,281 $9,466 $9,656 $9,849 $10,046 $10,247 $10,452 Repair and Maintenance $2,500 $2,550 $2,601 $2,653 $2,706 $2,760 $2,815 $2,872 $2,929 $2,988 $3,047 Management(2% EFI) $9,641 $9,930 $10,228 $10,534 $10,850 $11,176 $11,511 $11,857 $12,212 $12,579 $12,956 Super $12,000 $12,240 $12,485 $12,734 $12,989 $13,249 $13,514 $13,784 $14,060 $14,341 $14,628 Property Tax $36,453 $37,182 $37,926 $38,684 $39,458 $40,247 $41,052 $41,873 $42,710 $43,565 $44,436 Net Operating Income $407,859 $420,740 $434,020 $447,712 $461,828 $476,381 $491,385 $506,854 $522,800 $539,240 $556,189 The increasing net operating income insures that the property will have higher returns as time progresses. This makes the property a very attractive investment to potential investors and future owners of the property. Financials

13. Financials Financials 10 Year Projection (All Equity ) Year 1 2 3 4 5 6 7 8 9 10 11 Cap Rate                         Net Operating Income   $407,859 $420,740 $434,020 $447,712 $461,828 $476,381 $491,385 $506,854 $522,800 $539,240 $556,189 NPV (2%) $4,208,368                       Cash Flow -$8,750,000 $407,859 $420,740 $434,020 $447,712 $461,828 $476,381 $491,385 $506,854 $522,800 $12,471,442   IRR 7.81%                       NPV (2%) $13,996,929                       Profit $5,246,929                       Profit/Purchase Price + Renovation 60%                       10 Year Projection (Debt and Jr. Loan ) With 4.66% Cap Going In and Out Cap Year 1 2 3 4 5 6 7 8 9 10 11 Cap Rate                         Net Operating Income   $407,859 $420,740 $434,020 $447,712 $461,828 $476,381 $491,385 $506,854 $522,800 $539,240 $556,189 Debt   -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$5,203,030   Capital Expenditure   -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 Cash flow   $42,964 $55,845 $69,125 $82,817 $96,933 $111,486 $126,490 $141,958 $157,905 $7,253,412   JV(75 %) -$2,000,000 $32,223 $41,883 $51,844 $62,113 $72,700 $83,615 $94,868 $106,469 $118,429 $5,440,059   JV IRR 12.61%                       Team Cash Flow -$500,000 $10,741 $13,961 $17,281 $20,704 $24,233 $27,872 $31,623 $35,490 $39,476 $1,813,353   IRR 16.22% 10 Year Projection (Debt and Jr. Loan ) With 4.66 % Cap Going In and Out Cap Year 1 2 3 4 5 6 7 8 9 10 11 Cap Rate                         Net Operating Income   $407,859 $420,740 $434,020 $447,712 $461,828 $476,381 $491,385 $506,854 $522,800 $539,240 $556,189 Debt   -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$349,895 -$5,203,030   Capital Expenditure   -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 -$15,000 Cash Flow   $42,964 $55,845 $69,125 $82,817 $96,933 $111,486 $126,490 $141,958 $157,905 $4,591,023   JV(75 %) -$2,000,000 $32,223 $41,883 $51,844 $62,113 $72,700 $83,615 $94,868 $106,469 $118,429 $3,443,268   JV IRR 8.13%                       Team Cash Flow -$500,000 $10,741 $13,961 $17,281 $20,704 $24,233 $27,872 $31,623 $35,490 $39,476 $1,147,756   IRR 11.65%                       Cap Purchase price $ 8,750,000 Going in cap 4.66 % Reversion price(4.66 cap) $ 11,932,202 Reversion price(6 cap) $ 9,269,813 Given Team Equity $ 500,000 Investors Equity $ 2,000,000     Mortgage       Annual Monthly Loan Amount $ 6,250,000     Payment   $ 349,895 $ 29, 157 .92 Interest rate   3.81% 0.32% Number Payment   30 360 End of year 10 $ 4,853,135    

14. Comparable Valuation The Target Property ` Comparable 1 Comparable 2 Comparable 3 539 East 87 th Street New York, NY 10128 Asking Price: $8,750,000 Price Per Sq. Ft.: $889.23 Rentable Sq. Ft: 9,840 NOI: $427,141 Cap Rate: 4.88% 25 West 71 st Street New York, NY 10023 Asking Price: $6,955,000 Price Per Sq. Ft: $1,229.23 Rentable Sq. Ft : 5,658 NOI: $214,567 Cap Rate: 3.09% East 4 th Street New York, NY 10003 Asking Price: $9,000,000 Price Per Sq. Ft: $1,058.82 Rentable Sq. Ft : 8,500 NOI: $458,000 Cap Rate: 5.09% 108 Kenilworth Place Brooklyn, NY 11210 Asking Price: $6,500,000 Price Per Sq. Ft.: $278.02 Rentable Sq. Ft : 23,380 NOI: $374,634 Cap Rate: 5.76% The target property was compared to three other properties around New York with similar asking prices and square footage. It was the best deal amongst all of the comparable properties located directly in New York City, as it offered more square footage for cheaper rates and showed promise in Net Operating Income as well.

15. Closing Why Invest in 539 E 87 th Street Upper East Side Residential? The Location is in New York City, the greatest city in the world. Times Square and Central Park are not quite far from the residence . The property is also right by the East River, which can open doors for many recreational activities and ideas for tenants. There are endless possibilities of things to do, places to go and people to see in the city. All these factors will attract tenants to the property and increase revenue. Education is highly rated in the area, which will attract and open doors for many t enants to further their education , their families and children. Stable economic activity provides insurance that the property’s value and revenue will stay at a steady pace with no drastic changes. As employment in certain sectors is expected to increase , and jobs are expected to grow, rents from tenants are assured and leases are certainly expected to be renewed . High income distribution in the area assures rents will be paid on time and revenues will continue to increase. Transportation is easily accessible. This will attract tenants, who need to get to work, school and other places in time. Tenants are well educated and have high incomes in the community. In addition, as jobs are expected to grow by 32.04% in the city, this may further help household incomes in the area continue to stay high and stable.

16. Appendix Sources www.bestplaces.net/economy www.freedemographicsdata.com/new-york Googlemaps.com Streeteasy.com Trulia.com