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Executive Investment Summary

Property Information

Type Multi-Family No. of Units 3

Purchase Price $ 460,000 Price Per Unit $153,333

Appreciation Rate 5.00% Total Square Feet 3,900

Fair Market Value $ 500,000 Price Per Sq. Ft. $ 118

See notes on page 4 for further explanations

Financing

% of Asking % of Cost Down Payment: $ 190,000 42.22% 41.30% Initial Loan Balance: $ 270,000 60.00% 58.70%

Loan Amount Interest Rate Term Payment

$ 270,000 7.00% 30 $ 1,796

Income & Expenses

Monthly Rents: $ 4,500 Annual Rents: $ 54,000 Other Annual Income: $ Annual Vacancy: $ (2,700) Annual Expenses: $(18,680) Annual Reserves: $ MIP Payments $ Annual Debt Service: $(19,759) Net Operating Income (NOI) $ 32,620

Assumptions: Rental Growth Rate: 2.50% Expense Growth Rate: 1.00% Appreciation Rate 2.50% Marginal Tax Rate: 34.00% Capital Gain Tax Rate: 21.00%

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Financial Measures Year 1 Year 5 Year 10

Debt Coverage Ratio (DCR) 1.65 1.71 2.00 Loan-to-Value Ratio (LVR) 52.2% 45.0% 36.3% Capitalization Rate Based on Cost 7.09% 8.03% 9.36% Capitalization Rate Based on Resale Price 6.36% 6.53% 6.73% Net Present Value (NPV) - B/ Taxes 13.50% 10,103 3,721 (4,890) Net Present Value (NPV) - A/Taxes 10.00% 7,877 6,270 6,720 Cash on Cash Return - Before Taxes 6.77% 8.10% 11.31% Cash on Cash Return - After Taxes 6.05% 6.82% 8.67% Internal Rate of Return Before Taxes 13.99% 13.12% Internal Rate of Return After Taxes 10.79% 10.48% Modified Internal Rate of Return Before Taxes 12.68% 10.85% Modified Internal Rate of Return After Taxes 9.82% 8.71%

Executive Summary Notes:

The initial purchase price of $460,000 includes a property cost of $270,000 ($30,000 below it’s FMV of $300,000), $180,000 in renovations (which will yield $200,000 in increased value) and an estimated $10,

000 in closing cost and fees.

Cost = $270 (Property) + $180 (Renovations) + $10 (Closing /Fees) = $460 Value = $300 (Property) + $200 (Renovations) = $500

Total value of $500,000 minus a total cost of $460,000 = $40,000 initial equity.

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Rental Growth & Net Rent Amounts

Year Gross Rent Vacancy Rate Vacancy Amount Net Rent

Year 1 $ 54,000 5.00% $ 2,700 $ 51,300 Year 2 55,350 5.00% 2,768 52,583 Year 3 56,734 5.00% 2,837 53,897 Year 4 58,152 5.00% 2,908 55,244 Year 5 59,606 5.00% 2,980 56,626 Year 6 61,096 5.00% 3,055 58,041 Year 7 62,623 5.00% 3,131 59,492 Year 8 64,189 5.00% 3,209 60,980 Year 9 65,794 5.00% 3,290 62,504

Year 10 67,439 5.00% 3,372 64,067

Chart assumes a 2.5% annual increase in rental income

Property Appreciation

Initial FMV Year Annual Rate $ 500,000

Year 1 2.50% $ 512,500 Year 2 2.50% 525,313 Year 3 2.50% 538,445 Year 4 2.50% 551,906 Year 5 2.50% 565,704 Year 6 2.50% 579,847 Year 7 2.50% 594,343 Year 8 2.50% 609,201 Year 9 2.50% 624,431 Year 10 2.50% 640,042

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Cash Flow Analysis Rental Activity Analysis Year 1 Year 2 Year 3 Year 4 Year 5

Potential Rental Income $ 54,000 $ 55,350 $ 56,734 $ 58,152 $ 59,606 Other Income - - - - - Less: Vacancy & Credit Losses (2,700) (2,768) (2,837) (2,908) (2,980) Less: Funded Reserves - - - - - Less: Operating Expenses (18,680) (18,924) (19,171) (19,422) (19,677) Net Operating Income (NOI) $ 32,620 $ 33,659 $ 34,726 $ 35,822 $ 36,948 Less: Annual Debt Service (19,759) (21,556) (21,556) (21,556) (21,556) Less: MIP Payments - - - - - Less: Funded Reserves - - - - - CASH FLOW Before Taxes $ 12,861 $ 12,103 $ 13,170 $ 14,267 $ 15,392 Income Taxes: Benefit (Expense) (1,374) (1,091) (1,526) (1,975) (2,441) CASH FLOW After Taxes $ 11,486 $ 11,012 $ 11,645 $ 12,291 $ 12,951 Property Resale Analysis Projected Sales Price $ 512,500 $ 525,313 $ 538,445 $ 551,906 $ 565,704 Projected Sale Price - Improvements - - - - - Less: Selling Expenses (30,750) (31,519) (32,307) (33,114) (33,942) Adjusted Projected Sales Price $ 481,750 $ 493,794 $ 506,139 $ 518,792 $ 531,762 Less: Mortgage(s) Balance Payoff (267,493) (264,569) (261,434) (258,072) (254,467) SALE PROCEEDS Before Taxes $ 214,257 $ 229,224 $ 244,705 $ 260,720 $ 277,295 Tax Benefit from Suspended Losses (if any) - - - - - Income Taxes from Sale: Benefit (Expense) (8,078) (14,271) (20,527) (26,848) (33,236) SALE PROCEEDS After Taxes $ 206,178 $ 214,953 $ 224,177 $ 233,872 $ 244,059 Cash Position Cash Generated in Current Year $ 11,486 $ 11,012 $ 11,645 $ 12,291 $ 12,951 Cash Generated in Previous Years n/a 11,486 22,499 34,143 46,434 Cash Generated from Property Sale 206,178 214,953 224,177 233,872 244,059 Cash Inflow (Outflow) from Refinancing - - - - - Original Initial Investment (190,000) (190,000) (190,000) (190,000) (190,000) Total Potential CASH Generated $ 27,665 $ 47,452 $ 68,320 $ 90,306 $ 113,445

Financial Measures Debt Coverage Ratio (DCR) 1.65 1.56 1.61 1.66 1.71 Loan-to-Value Ratio (LVR) 52.2% 50.4% 48.6% 46.8% 45.0% Capitalization Rate Based on Cost 7.09% 7.32% 7.55% 7.79% 8.03% Capitalization Rate Based on Resale Price 6.36% 6.41% 6.45% 6.49% 6.53% Value of Property Using this Cap Rate 420,903 434,310 448,080 462,224 476,751 Gross Rent Monthly Multiplier (GRM) 100.00 113.89 113.89 113.89 113.89 Gross Rent Yearly Multiplier (GRM) 8.33 9.49 9.49 9.49 9.49 Value of Property Using this GRM 648,000 664,200 680,805 697,825 715,271 Net Present Value (NPV) - Before Taxes 10,103 8,664 7,095 5,436 3,721 Net Present Value (NPV) - After Taxes 7,877 7,190 6,720 6,425 6,270 Cash-on-Cash Return on Equity 14.56% 9.60% 9.71% 9.81% 9.89% Cash-on-Cash Return - Before Taxes 6.77% 6.37% 6.93% 7.51% 8.10% Cash-on-Cash Return - After Taxes 6.05% 5.80% 6.13% 6.47% 6.82% Internal Rate-of-Return (IRR) - Before Taxes 19.54% 16.14% 14.98% 14.37% 13.99% Internal Rate-of-Return (IRR) - After Taxes 14.56% 12.12% 11.35% 10.99% 10.79% Modified Internal Rate-of-Return (MIRR) - Before Taxes 19.54% 15.66% 14.18% 13.30% 12.68% Modified Internal Rate-of-Return (MIRR) - After Taxes 14.56% 11.79% 10.78% 10.21% 9.82%

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Cash Flow Analysis (continued) Rental Activity Analysis Year 6 Year 7 Year 8 Year 9 Year 10

Potential Rental Income $ 61,096 $ 62,623 $ 64,189 $ 65,794 $ 67,439 Other Income - - - - - Less: Vacancy & Credit Losses (3,055) (3,131) (3,209) (3,290) (3,372) Less: Funded Reserves - - - - - Less: Operating Expenses (19,937) (20,200) (20,468) (20,740) (21,017) Net Operating Income (NOI) $ 38,104 $ 39,292 $ 40,512 $ 41,764 $ 43,050 Less: Annual Debt Service (21,556) (21,556) (21,556) (21,556) (21,556) Less: MIP Payments - - - - - Less: Funded Reserves - - - - - CASH FLOW Before Taxes $ 16,549 $ 17,736 $ 18,956 $ 20,208 $ 21,494 Income Taxes: Benefit (Expense) (2,923) (3,421) (3,938) (4,473) (5,027) CASH FLOW After Taxes $ 13,626 $ 14,315 $ 15,018 $ 15,735 $ 16,467 Property Resale Analysis Projected Sales Price $ 579,847 $ 594,343 $ 609,201 $ 624,431 $ 640,042 Projected Sale Price - Improvements - - - - - Less: Selling Expenses (34,791) (35,661) (36,552) (37,466) (38,403) Adjusted Projected Sales Price $ 545,056 $ 558,682 $ 572,649 $ 586,966 $ 601,640 Less: Mortgage(s) Balance Payoff (250,601) (246,456) (242,012) (237,246) (232,135) SALE PROCEEDS Before Taxes $ 294,454 $ 312,226 $ 330,638 $ 349,720 $ 369,505 Tax Benefit from Suspended Losses (if any) - - - - - Income Taxes from Sale: Benefit (Expense) (39,691) (46,216) (52,813) (59,483) (66,228) SALE PROCEEDS After Taxes $ 254,764 $ 266,010 $ 277,825 $ 290,237 $ 303,277 Cash Position Cash Generated in Current Year $ 13,626 $ 14,315 $ 15,018 $ 15,735 $ 16,467 Cash Generated in Previous Years 59,386 73,012 87,327 102,344 118,079 Cash Generated from Property Sale 254,764 266,010 277,825 290,237 303,277 Cash Inflow (Outflow) from Refinancing - - - - - Original Initial Investment (190,000) (190,000) (190,000) (190,000) (190,000) Total Potential CASH Generated $ 137,775 $ 163,336 $ 190,169 $ 218,317 $ 247,823

Financial Measures Debt Coverage Ratio (DCR) 1.77 1.82 1.88 1.94 2.00 Loan-to-Value Ratio (LVR) 43.2% 41.5% 39.7% 38.0% 36.3% Capitalization Rate Based on Cost 8.28% 8.54% 8.81% 9.08% 9.36% Capitalization Rate Based on Resale Price 6.57% 6.61% 6.65% 6.69% 6.73% Value of Property Using this Cap Rate 491,671 506,993 522,729 538,890 555,485 Gross Rent Monthly Multiplier (GRM) 113.89 113.89 113.89 113.89 113.89 Gross Rent Yearly Multiplier (GRM) 9.49 9.49 9.49 9.49 9.49 Value of Property Using this GRM 733,153 751,481 770,268 789,525 809,263 Net Present Value (NPV) - Before Taxes 1,978 229 (1,508) (3,218) (4,890) Net Present Value (NPV) - After Taxes 6,228 6,271 6,379 6,534 6,720 Cash-on-Cash Return on Equity 9.97% 10.03% 10.09% 10.13% 10.17% Cash-on-Cash Return - Before Taxes 8.71% 9.33% 9.98% 10.64% 11.31% Cash-on-Cash Return - After Taxes 7.17% 7.53% 7.90% 8.28% 8.67% Internal Rate-of-Return (IRR) - Before Taxes 13.72% 13.52% 13.36% 13.23% 13.12% Internal Rate-of-Return (IRR) - After Taxes 10.67% 10.60% 10.54% 10.51% 10.48% Modified Internal Rate-of-Return (MIRR) - Before Taxes 12.19% 11.78% 11.43% 11.12% 10.85% Modified Internal Rate-of-Return (MIRR) - After Taxes 9.51% 9.27% 9.06% 8.87% 8.71%

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Annual Property Operating Data Year 1 % Year 2 % Year 3 % Year 4 %

Potential Rental Income $ 54,000 105.26% $ 55,350 105.26% $ 56,734 105.26% $ 58,152 105.26% Less: Vacancy & Credit Losses (2,700) -5.26% (2,768) -5.26% (2,837) -5.26% (2,908) -5.26% 0.00% 0.00% 0.00% 0.00%

Effective Rental Income $ 51,300 100.00% $ 52,583 100.00% $ 53,897 100.00% $ 55,244 100.00% Other Income - 0.00% - 0.00% - 0.00% - 0.00%

Gross Operating Income $ 51,300 100.00% $ 52,583 100.00% $ 53,897 100.00% $ 55,244 100.00% Operating Expenses

Accounting 2,000 3.90% 2,020 3.84% 2,040 3.79% 2,061 3.73% Advertising 100 0.19% 101 0.19% 102 0.19% 103 0.19% Association Fees - 0.00% - 0.00% - 0.00% - 0.00% Auto & Travel - 0.00% - 0.00% - 0.00% - 0.00% Cleaning 100 0.19% 101 0.19% 102 0.19% 103 0.19% Commissions - 0.00% - 0.00% - 0.00% - 0.00% Insurance 2,500 4.87% 2,525 4.80% 2,550 4.73% 2,576 4.66% Landscaping 300 0.58% 303 0.58% 306 0.57% 309 0.56% Legal 1,000 1.95% 1,010 1.92% 1,020 1.89% 1,030 1.86% Maintenance 500 0.97% 505 0.96% 510 0.95% 515 0.93% Management Fee 3,780 7.37% 3,875 7.37% 3,971 7.37% 4,071 7.37% On-Site Management - 0.00% - 0.00% - 0.00% - 0.00% Payroll - 0.00% - 0.00% - 0.00% - 0.00% Pest Control - 0.00% - 0.00% - 0.00% - 0.00% Professional Fees 500 0.97% 505 0.96% 510 0.95% 515 0.93% Repairs 1,000 1.95% 1,010 1.92% 1,020 1.89% 1,030 1.86% Supplies 500 0.97% 505 0.96% 510 0.95% 515 0.93%

Taxes: 0.00% 0.00% 0.00% 0.00% Property Taxes 4,500 8.77% 4,545 8.64% 4,590 8.52% 4,636 8.39% Personal Property - 0.00% - 0.00% - 0.00% - 0.00% Payroll - 0.00% - 0.00% - 0.00% - 0.00% Other - 0.00% - 0.00% - 0.00% - 0.00% Trash Removal - 0.00% - 0.00% - 0.00% - 0.00%

Utilities: 0.00% 0.00% 0.00% 0.00% Gas 200 0.39% 202 0.38% 204 0.38% 206 0.37% Electricity 200 0.39% 202 0.38% 204 0.38% 206 0.37% Telephone - 0.00% - 0.00% - 0.00% - 0.00% Water 1,500 2.92% 1,515 2.88% 1,530 2.84% 1,545 2.80% Other Utilities - 0.00% - 0.00% - 0.00% - 0.00% Miscellaneous - 0.00% - 0.00% - 0.00% - 0.00% One-Time Expenses - 0.00% - 0.00% - 0.00% - 0.00%

0.00% 0.00% 0.00%

Total Operating Expenses $ 18,680 36.41% $ 18,924 35.99% $ 19,171 35.57% $ 19,422 35.16%

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Annual Property Operating Data (Continued) Year 5 % Year 6 % Year 7 % Year 8 %

Potential Rental Income $ 59,606 105.26% $ 61,096 105.26% $ 62,623 105.26% $ 64,189 105.26% Less: Vacancy & Credit Losses (2,980) -5.26% (3,055) -5.26% (3,131) -5.26% (3,209) -5.26% 0.00% 0.00% 0.00% 0.00%

Effective Rental Income $ 56,626 100.00% $ 58,041 100.00% $ 59,492 100.00% $ 60,980 100.00% Other Income - 0.00% - 0.00% - 0.00% - 0.00%

Gross Operating Income $ 56,626 100.00% $ 58,041 100.00% $ 59,492 100.00% $ 60,980 100.00% Operating Expenses

Accounting 2,081 3.68% 2,102 3.62% 2,123 3.57% 2,144 3.52% Advertising 104 0.18% 105 0.18% 106 0.18% 107 0.18% Association Fees - 0.00% - 0.00% - 0.00% - 0.00% Auto & Travel - 0.00% - 0.00% - 0.00% - 0.00% Cleaning 104 0.18% 105 0.18% 106 0.18% 107 0.18% Commissions - 0.00% - 0.00% - 0.00% - 0.00% Insurance 2,602 4.59% 2,628 4.53% 2,654 4.46% 2,680 4.40% Landscaping 312 0.55% 315 0.54% 318 0.54% 322 0.53% Legal 1,041 1.84% 1,051 1.81% 1,062 1.78% 1,072 1.76% Maintenance 520 0.92% 526 0.91% 531 0.89% 536 0.88% Management Fee 4,172 7.37% 4,277 7.37% 4,384 7.37% 4,493 7.37% On-Site Management - 0.00% - 0.00% - 0.00% - 0.00% Payroll - 0.00% - 0.00% - 0.00% - 0.00% Pest Control - 0.00% - 0.00% - 0.00% - 0.00% Professional Fees 520 0.92% 526 0.91% 531 0.89% 536 0.88% Repairs 1,041 1.84% 1,051 1.81% 1,062 1.78% 1,072 1.76% Supplies 520 0.92% 526 0.91% 531 0.89% 536 0.88%

Taxes: 0.00% 0.00% 0.00% 0.00% Property Taxes 4,683 8.27% 4,730 8.15% 4,777 8.03% 4,825 7.91% Personal Property - 0.00% - 0.00% - 0.00% - 0.00% Payroll - 0.00% - 0.00% - 0.00% - 0.00% Other - 0.00% - 0.00% - 0.00% - 0.00% Trash Removal - 0.00% - 0.00% - 0.00% - 0.00%

Utilities: 0.00% 0.00% 0.00% 0.00% Gas 208 0.37% 210 0.36% 212 0.36% 214 0.35% Electricity 208 0.37% 210 0.36% 212 0.36% 214 0.35% Telephone - 0.00% - 0.00% - 0.00% - 0.00% Water 1,561 2.76% 1,577 2.72% 1,592 2.68% 1,608 2.64% Other Utilities - 0.00% - 0.00% - 0.00% - 0.00% Miscellaneous - 0.00% - 0.00% - 0.00% - 0.00% One-Time Expenses - 0.00% - 0.00% - 0.00% - 0.00%

0.00% 0.00% 0.00% 0.00%

Total Operating Expenses $ 19,677 33.01% $ 19,937 34.35% $ 20,200 33.95% $ 20,468 33.57%

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Annual Property Operating Data (Continued) Year 9 % Year 10 %

Potential Rental Income $65,794 105.26% $67,439 105.26% Less: Vacancy & Credit Losses (3,290) -5.26% (3,372) -5.26% 0.00% 0.00%

Effective Rental Income $62,504 100.00% $64,067 100.00% Other Income - 0.00% - 0.00%

Gross Operating Income $62,504 100.00% $64,067 100.00% Operating Expenses

Accounting 2,166 3.46% 2,187 3.41% Advertising 108 0.17% 109 0.17% Association Fees - 0.00% - 0.00% Auto & Travel - 0.00% - 0.00% Cleaning 108 0.17% 109 0.17% Commissions - 0.00% - 0.00% Insurance 2,707 4.33% 2,734 4.27% Landscaping 325 0.52% 328 0.51% Legal 1,083 1.73% 1,094 1.71% Maintenance 541 0.87% 547 0.85% Management Fee 4,606 7.37% 4,721 7.37% On-Site Management - 0.00% - 0.00% Payroll - 0.00% - 0.00% Pest Control - 0.00% - 0.00% Professional Fees 541 0.87% 547 0.85% Repairs 1,083 1.73% 1,094 1.71% Supplies 541 0.87% 547 0.85%

Taxes: 0.00% 0.00% Property Taxes 4,873 7.80% 4,922 7.68% Personal Property - 0.00% - 0.00% Payroll - 0.00% - 0.00% Other - 0.00% - 0.00% Trash Removal - 0.00% - 0.00%

Utilities: 0.00% 0.00% Gas 217 0.35% 219 0.34% Electricity 217 0.35% 219 0.34% Telephone - 0.00% - 0.00% Water 1,624 2.60% 1,641 2.56% Other Utilities - 0.00% - 0.00% Miscellaneous - 0.00% - 0.00% One-Time Expenses - 0.00% - 0.00%

0.00% 0.00%

Total Operating Expenses $20,740 33.18% $21,017 32.80%

Boston’s Income Property Specialist

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Willie James Mandrell, III Realtor, Notary Public

As a life long resident of the Boston area Willie is very familiar with the city’s neighborhoods and has a deep understanding of Boston’s real estate market. Willie attended Northeastern University and earned his bachelors degree in Business, Finance. He’s spent several years working in the Banking and Financial Services industries, and gained valuable experience evaluating the risks & returns of various investment assets, including real estate. Along with being a licensed investment advisor, Willie is also Founder & CEO of The Mandrell Company, a firm dedicated to assisting local rental owners in running an efficient and profitable rental property business.

P: 617-297-8641 F: 617-849-5679

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