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539 E 87 TH STREET UPPER EAST SIDE RESIDENTIAL
Tajdid Ajman
Nan Chen
Yannylbis Jimenez
Alex Xing Liu
Sze Nga Yip
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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 87th 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
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SAmenities (Unit with Washer and Dryer)
Stairs
Interior
Floor Plan with Garden
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Easy Access to Mass Transit
• Some nearby transportation hubs include:
• The FDR Drive, which is about 1 block away.
• E. 90th 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
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0.00%10.00%20.00%30.00%40.00%
Population by Occupation
New York, NY
United States
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%
0.00%10.00%20.00%30.00%40.00%
Un
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Economy
New York, NY
United States
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Demographics
0%
7%4%
9%
2%
0%
0%78%
American Indian
Asian
Black
Hispanic
Multiple
Native Hawaiian
Other
Household Income Distribution
8% 4% 6%
7%
12%
16%
11%13%
7%16%
<10K
10-15K
15-25K
25-35K
35-50K
50-70K
75-100K
100-150K
150-200K
>200K
• Local 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.
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ITYSchool District
Household Income Distribution
Education
0.00%5.00%
10.00%15.00%20.00%25.00%30.00%35.00%40.00%
Percentage
• 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.
REN
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Rent Roll
Unit Tenant Sq. Ft. Lease Exp. Rent (monthly) Rent (annually)
1E 11,789
8/31/13 $4,600.00 $55,200.00
1W 2 9/30/13 $4,600.00 $55,200.00
2F 31,789
12/31/12 $4,150.00 $49,800.00
2R 4 7/14/13 $4,400.00 $52,800.00
3F 51,789
5/31/13 $4,100.00 $49,200.00
3R 6 8/31/13 $4,200.00 $50,400.00
4F 71,789
8/31/13 $4,150.00 $49,800.00
4R 8 7/31/13 $4,033.00 $48,396.00
5F 91,789
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
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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
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10 Year Projection (All Equity)
Year 0 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 0 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 0 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
InvestorsEquity $ 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
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NThe Target Property
`
Comparable 1 Comparable 2 Comparable 3
• 539 East 87th 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 71st 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 4th 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.
CLO
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Why Invest in 539 E 87th StreetUpper 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 tenants 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.