7 Apartments 1321 Eutaw Place in Historic Bolton Hill, Baltimore City Maryland 21217
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…t 7 Apartments 1321 Eutaw Place in Historic Bolton Hill, Baltimore City Maryland 21217 2 One-Bedroom Apartments 4 Two-Bedroom Apartments 1 Three-Bedroom Apartments » Property BUILT 1880, total gut rehab circa 1985 ZONING OR-1 – Office-Residential, 7 Dwellings Unit License LOT 55’ x 130’ Block 400 Lot 23 SIZE 8,544 Gross Building Area » Kitchens and Baths CABINETS Wood Cabinets, Formica counters, stainless sink. » Exterior APPLIANCES 30” electric range, dishwasher, disposal and refrigerator CONSTRUCT Brick construction. in each apartment. Washer-Dryer in each apartment. ROOF Modified Rubber Roof. BATHS Most ceramic tile floors with shower-tub. 2 vintage cast PARKING 7 off-street parking spaces. iron clawfoot tubs. Modern vanity or pedestal sink. FIRE ESCAPE steel. AMENITIES Washer-dryer in each apartment. Large side yard. » Interior 3 blocks from MICA, WALLS & CEILINGS 10’, 12’ and 13; ceiling heights. Original wood molding 2 Blocks to State Center Metro. and trim. Plaster walls and ceilings. FLOORS Decorative in-lay hardwood veneer flooring in most living areas. Terrace apartments have ceramic tile floors in » Environmental living areas, with some laminate flooring. LEAD PAINT Lead Safe per MDE standards DOORS Many original raised panel doors. Some pocket doors. OIL No oil tanks observed. WINDOWS Dual pane replacement windows throughout. Wood MOLD No mold observed. windows in front; vinyl on the sides and rear. ASBESTOS No asbestos observed. » Utilities Seller will convey 100% membership interests in the Limited HEAT Separate gas fired forced air heating for each apartment. Liability Company whose sole asset is this Property. AIR CONDITIONING Central Air Conditioning in each unit. HOT WATER Each unit has a 30- or 40-gallon gas-fired water heater. ELECTRIC All new wiring with 100 Amp Main to each unit. PLUMBING All water pipes appear to be copper. TRASH Waste Management Dumpster at $105/month Call Ben Frederick, III, CCIM 410 752 6400 Seller’s Exclusive Agent $1,200,000 in fee simple $171,429 per unit. $140 per sq. ft. No ground rent. www.BenFrederick.com This offering is made without regard to race, religion, color, creed, sex, marital & family status, and/or handicap. The information contained herein is believed accurate and from reliable sources; however, neither the owner nor Ben Frederick Realty, Inc. or any of their agents and/or sub-agents make any warranties or representations with regard to this information, the physical condition of the Property or any of its components, nor the financial performance of the Property. All information should be considered as observed by Broker. The Purchaser is hereby advised to verify all information to Purchaser’s own satisfaction. This Property and this offering are subject to prior sale and withdrawal at any time as the owner may deem appropriate. 1 3 2 1 E U T A W P L A C E I N V E S T M E N T P R O P E R T Y I N C O M E A N D E X P E N S E B U D G E T S U G G E S T E D F I N A N C I N G: I N V E S T M E N T O F F E R I N G: 1,200,000 Loan‐to‐Value 75% S U G G E S T E D L O A N A M O U N T 900,000 Loan Amount 900,000 E S T I M A T E D C L O S I N G C O S T S 60,000 Interest Rate 4.75% T O T A L I N V E S T M E N T 360,000 Term 25 Price Per Unit 7 171,429 Monthly P & I$ 5,131.06 Price Per Sq.Ft. 8,544 140 Unit Size Lease Expires Sec Dep Sec Dep Date Current Actual Rent Market Rent Terrace A 2 BR 1/31/2020 1,295 2/1/2017 1,295 1,350 Terrace B 2 BR monthly 1,350 2/1/2018 1,350 1,400 1st Flr 3 BR 9/8/2019 3,195 9/8/2018 2,195 2,300 2nd Front 1 BR 3/31/2020 1,150 2/10/2018 1,150 1,200 2nd Rear 2 BR 8/31/2019 1,350 9/1/2018 1,350 1,400 3rd Front 1 BR 10/31/2019 1,150 10/25/2018 1,150 1,200 3rd Rear 2 BR 4/30/2020 1,295 4/1/2019 1,295 1,350 parking ‐ 175 Tenants pay a share of water bill 347 Total Monthly Rental Income 9,785 10,722 Gross Annual Income 117,420 128,667 GRM (actual) = 10.2 Vacancy / Credit Loss 3.0% (3,523) (3,860) GRM (market) = 9.3 Effective Annual Income 113,897 124,807 Real Estate Taxes actual 7/1/2019 548,000 12,933 Special Benefits District Surcharge 685 Ground Rent none 0 Insurance budget 500 per unit 3,500 License ‐ Baltimore City MFD actual 35 per resid unit 245 Lead Paint Registration Fee actual 30 per resid unit 210 Property Management budget 5.0% of collections 6,240 Dumpster 105 per month 1,260 Trash/Cleaning/Snow budget 50 per month 600 Repairs & Maintenance budget 750 per unit 5,250 Public Service Electric actual 30 per month 360 Water actual 50 per unit per mo 4,167 Expense/Unit= $5,070 28% TOTAL EXPENSES 35,450 Cap Rate= 7.45% NET OPERATING INCOME 89,357 DCR= 1.45 Less: Mortgage Payments: 61,573 ROI= 7.7% Monthly Cash Flow: $2,315 Annual Cash Flow: 27,784 C O M P A R A B L E S A L E S address date sold sales price # units Monthly Rent Price per Unit GRM 1327 Bolton St Apr‐18 405,000 3 3,600 135,000 9.4 1600 Park May‐17 540,000 4 5,495 135,000 8.2 1226 St Paul Jan‐18 835,000 6 7,550 139,167 9.2 1123 Eutaw Feb‐19 9,100,000 65 94,466 140,000 8.0 241 W Lanvale Jun‐18 450,000 3 150,000 1435 Bolton St Jul‐18 600,000 2 4,707 300,000 10.6 Illustration of the Four Components of "Return on Investment" 1 Cash Flow This first and perhaps most obvious component is "cash flow" - rental income minus expenses - or how much cash ends up in your pocket. 124,807 + Rental Income 35,450 - Operating Expenses 61,573 - Mortgage Payments 27,784 = Cash Flow 360,000 / Downpayment + Closing Costs 7.7% = Return on Investment from Cash Flow 2 Appreciation As the value of the property increases, your return on investment increases. 1,200,000 = Acquisiton Price 5% * First Year Appreciation 1,260,000 = Value at the end of Year 1. 60,000 = Amount of Value Increase 360,000 / Downpayment + Closing Costs 17% = Return on Investment from Appreciation 3 Equity Build-Up 4.75% 25$ 5,131.06 Even if the property did not increase in value, Equity will increase solely from paying down the mortgage. 900,000 = Loan Amount at Closing 880,762 = Loan Amount at the end of Year 1 19,238 - Equity Build-Up in Year 1 360,000 / Downpayment + Closing Costs 5.3% = Return on Investment from Equity Build-Up 4 Tax Benefits One pays less income taxes on a real estate investment than on other investment vehicles. 89,357 = Cash Flow Before Loan Payments (rents less expenses) 34,000 - Depreciation (assumes 15% land, 30 year recovery) 42,335 - Mortgage Interest 13,022 = Taxable Income Year 1 10,418 Less 20% Exclusion for LLC Ownership under new tax law 37% * Marginal Tax Rate 3,854.55 = Federal Income Tax 3,855 Federal Income Tax 27,784 / Cash Flow 13.9% = Effective Tax Rate on This Investment 10,280 = Tax if Cash Flow came from a non-preferred investment vehicle 3,855 - Tax from this preferred investment vehicle. 6,426 = Income Tax Savings 1.8% Return on Investment from Tax Savings Total / Summary 1: 27,784 Cash Flow 2: 60,000 Appreciation Year 1 3: 19,238 Equity Build Up Year 1 4: 6,426 Tax Savings Year 1 113,448 Total Return from this Investment 360,000 Downpayment + Closing Costs 31.5% Total Return from this Investment For illustration purposes only. Though believed accurate reliable, information is not guaranteed. Illustration of Internal Rate of Return over a 10-Year Holding Period 1 3 2 1 E U T A W P L A C E Purchase Price 1,200,000 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Annual Rent 4.0% 128,667 133,813 139,166 144,732 150,522 156,542 162,804 169,316 176,089 183,133 Vacancy 3.0% 3,860 4,014 4,175 4,342 4,516 4,696 4,884 5,079 5,283 5,494 Effective Income 124,807 129,799 134,991 140,390 146,006 151,846 157,920 164,237 170,806 177,639 Expenses 4.0% 35,450 36,868 38,342 39,876 41,471 43,130 44,855 46,649 48,515 50,456 Exp as a percent of Annual Rent 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% Exp per unit 7 5,064 5,267 5,477 5,697 5,924 6,161 6,408 6,664 6,931 7,208 NOI 0 89,357 92,931 96,648 100,514 104,535 108,716 113,065 117,588 122,291 127,183 Debt Service$ 5,131 61,573 61,573 61,573 61,573 61,573 61,573 61,573 61,573 61,573 61,573 Before Tax Cash Flow (360,000) 27,784 31,358 35,076 38,942 42,962 47,144 51,492 56,015 60,718 1,011,444 18.1% Internal Rate of Return NOI 89,357 92,931 96,648 100,514 104,535 108,716 113,065 117,588 122,291 127,183 Less Interest 42,335 41,401 40,421 39,395 38,318 37,189 36,005 34,764 33,462 32,098 Less Depreciation 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 Taxable Income to Individuals 15,022 19,530 24,227 29,120 34,217 39,527 45,060 50,824 56,829 63,085 Pass Thru Entity 20% (3,004) (3,906) (4,845) (5,824) (6,843) (7,905) (9,012) (10,165) (11,366) (12,617) Taxable Income 0 12,018 15,624 19,382 23,296 27,374 31,622 36,048 40,659 45,463 50,468 Tax @ * 37% 4,447 5,781 7,171 8,619 10,128 11,700 13,338 15,044 16,821 18,673 After Tax Cash Flow (360,000) 23,338 25,577 27,905 30,322 32,834 35,444 38,155 40,971 43,897 847,672 14.9% Internal Rate of Return Purchase 1,200,000 Assume a Sale at End of Year 10 L-V 75% Annual Rent Roll 183,133 Loan 900,000 GRM 9.3 Down Payment 300,000 annual appreciation 3.6% Price 1,707,974 Cap Improvement - Sale Costs 6% 102,478 Closing Costs 60,000 Less: Basis 880,000 Initial Investment 360,000 Gain 725,496 Rate 4.75% Tax @ 20% 145,099 Term 25 Mortgage Balance 659,661 P&I $5,131.06 Sale Proceeds Before Tax 945,834 Sale Proceeds After Tax 800,735 Mortgage Amortization 1 2345678910 900,000 Beg Bal 900,000 880,762 860,590 839,439 817,261 794,006 769,623 744,055 717,246 689,136 4.75% Prin 19,238 20,172 21,151 22,178 23,255 24,384 25,567 26,809 28,110 29,475 25.0 Int 42,335 41,401 40,421 39,395 38,318 37,189 36,005 34,764 33,462 32,098 5,131 Bal EOY 880,762 860,590 839,439 817,261 794,006 769,623 744,055 717,246 689,136 659,661 Cost Recovery / Depreciation 1,200,000 1,200,000 Building 80% 960,000 Land 20% 240,000 Life 30 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 32,000 Basis * Tax rate of 35% applies to income of $200,001 to $500,000 for singles; $400,001 to $600,000 for married filing jointly.