Future Estate - Sydney

PROPERTY INVESTMENT CASH FLOW ANALYSIS - FIRST YEAR16-Jul-2013

Prepared for:Consultant:

Property: Nelson Street, Blacks BeachDescription: Class B - 2 Bedroom Unit (Retail)

Investment CostPurchase price 510,000Purchase costs 17,975Furniture package 20,000Loan costs 4,344Total investment cost 552,319

Loan DetailsInitial cash invested 100,000Additional loan (if required) 17,500Initial loan amount (total cost + any additional loan – cash invested) 469,819Loan type I/O (6.00%)Interest payments 28,189Total loan payments 28,189Closing loan balance 469,819

Property Income and ExpenditureRental income 82,810Rental expenses 15,435Net rental income (rent retained – expenses paid) 67,375

Pre-Tax Cash Flow (net rent – loan payments) 39,186

Tax DeductionsCash deductions

Loan interest 28,189Rental expenses 15,435

Non-Cash DeductionsDepreciation – Building ($204,084 @ 2.50%) 5,102Depreciation – Furniture, fixtures & fittings 15,868Loan cost write-off ($4,344 over 5 yrs) 869

Total Tax Deductions 65,463

Tax Credit CalculationPresent taxable income 95,000Rental income 82,810Total income 177,810Total deductions 65,463New taxable income 112,347Present tax 16,550New tax 22,365Tax credit or rebate -5,815

Annual after-tax surplus (pre-tax cash flow + tax credit) $33,371Weekly after-tax surplus $642

Disclaimer: Note that the computer projections listed above simply illustrate the outcome calculated from the input valuesand the assumptions contained in the model. Hence the figures can be varied as required and are in no way intended to be aguarantee of future performance. Although the information is provided in good faith, it is also given on the basis that noperson using the information, in whole or in part, shall have any claim against Future Estate - Sydney, its servants,employees or consultants..

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Tabulated breakdown of items contributing to first year cash flow

INVESTMENT COST

Purchase price 510,000Purchase costs 17,975Furniture package 20,000Loan costs 4,344Total investment cost $552,319

Purchase Costs

Conveyancing costs: 2,000Govt. Stamp duty: 15,975Total Purchase costs: $17,975

Loan Costs

Establishment fees (0.30% of loan): 1,409Mortgage insurance (0.25% of loan): 1,175Mortgagee's solicitor's fees: 940Valuation fees: 300Registration of mortgage: 230Registration of title: 115Search fees: 175Total loan costs: $4,344

FINANCE

Initial cash invested 100,000Additional loan (if required) 17,500Initial loan amount (total cost + any additional loan – initial cash) 469,819Loan type I/O (6.00%)Interest payments 28,189Total loan payments $28,189Closing loan balance 469,819

Initial Investment & Loan Amount

Investment Loan Total CostProperty cost: 100,000 410,000 510,000Renovation costs: 0 0 0Purchase costs: 0 17,975 17,975Furniture costs: 0 20,000 20,000Loan costs: 0 4,344 4,344Additional loan: 17,500Totals: $100,000 $469,819 $552,319

Loan Details

Loan type: I/O Yrs 1-40Interest rate (yr 1) (%) 6.00Loan amount($): $469,819Loan costs (written off over 5 yrs): $4,344Monthly payment: $2,349Annual payment: $28,189

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PROPERTY INCOME & EXPENDITURE

Rental income 82,810Gross yield (rental income/property value) 16.24%Rental expenses 15,435Net rental income (rent retained – expenses paid) 67,375Net yield (net rental income/property value) 13.21%

Rental IncomeRent per week: 2,275Potential annual rent: 118,300Vacancy rate: 30.00%Annual rent: $82,810

Rental Expenses

Regular Expenses:Agent's commission (10.50%): 8,695Letting fees: 3,640Rates: 1,500Insurance: 800Maintenance: 500Other expenses: 300

Total regular expenses: 15,435Special expenses: 0Total expenses: $15,435Regular expenses as % of annual rent: 13.05%Net yield or Capitalisation rate: 13.21%

PRE-TAX CASH FLOW

Item Cash AmountRental income 82,810Rental expenses 15,435Loan interest 28,189Principal payments 0Cash investments 0Pre-tax cash flow (year 1) 39,186

TAX DEDUCTIONS

Cash deductions Loan interest 28,189Rental expenses 15,435

Non-Cash DeductionsDepreciation – Building ($204,084 @ 2.50%) 5,102Depreciation – Furniture, fixtures & fittings 15,868Loan cost write-off ($4,344 over 5 yrs) 869

Total Tax Deductions $65,463

Depreciation on the building (Capital allowance)

Property value: 510,000Depreciable amount: 204,084Depreciation allowance rate (%): 2.50Depreciation claim: $5,102

Depreciation of fittings (prime cost method)

Item Value Effective Life Depreciation(yrs)

Furniture package 20,000 15.00 1,333General fittings 166,365 15.00 11,091Low-value pool 18,365 4.00 3,443Total $204,730 $15,868

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TAX CREDIT CALCULATION

Present taxable income 95,000Rental income 82,810Total income 177,810Total deductions 65,463New taxable income 112,347Present tax 16,550New tax 22,365Tax credit or rebate -5,815

AFTER-TAX CASH FLOW

Annual after-tax surplus (pre-tax cash flow + tax credit) $33,371Weekly after-tax surplus $642

CASH FLOW PROJECTIONS

To estimate future cash flows, assumptions have been made with regard to change over time in rental income,rental expenses and taxable income. Rental income is assumed to increase at 4.00% per year from year 1. Rentalexpenses are assumed to increase at 4.00% per year from year 1.

Cash flow items Initial 1yr 2yr 3yr 5yr 10yrRental income 82,810 86,122 89,567 96,876 117,864Cash invested 100,000 0 0 0 0 0Principal payments 0 0 0 0 0Interest payments 28,189 28,189 28,189 28,189 28,189Rental expenses 15,435 16,052 16,695 18,057 21,969Pre-tax cash flow -100,000 39,186 41,881 44,684 50,630 67,706

Tax deductions 65,463 68,232 66,776 66,007 67,815Tax credits -5,815 -6,109 -8,210 -11,796 -19,732After-tax cash -100,000 33,371 35,772 36,474 38,834 47,974After-tax cash flow -100,000 33,371 35,772 36,474 38,834 47,974Cost /(income) per week (642) (688) (701) (747) (923)

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0 5 10 15 20 25-100,000

0

100,000

200,000

Year from purchase

($) Investment Property Cash Flows

Pre-tax After-tax

Cash flow projections over 25 years

Year Rental Loan Rental Pre-tax Tax credit After-taxincome payments expenses cash flow cash flow

$-100,000 $-100,0001yr $82,810 $28,189 $15,435 $39,186 $-5,815 $33,3712yr $86,122 $28,189 $16,052 $41,881 $-6,109 $35,7723yr $89,567 $28,189 $16,695 $44,684 $-8,210 $36,4744yr $93,150 $28,189 $17,362 $47,599 $-10,056 $37,5435yr $96,876 $28,189 $18,057 $50,630 $-11,796 $38,8346yr $100,751 $28,189 $18,779 $53,783 $-13,815 $39,9687yr $104,781 $28,189 $19,530 $57,062 $-15,317 $41,7458yr $108,972 $28,189 $20,311 $60,472 $-16,759 $43,7139yr $113,331 $28,189 $21,124 $64,018 $-18,227 $45,791

10yr $117,864 $28,189 $21,969 $67,706 $-19,732 $47,97411yr $122,579 $28,189 $22,848 $71,542 $-21,285 $50,25712yr $127,482 $28,189 $23,762 $75,532 $-22,892 $52,64013yr $132,581 $28,189 $24,712 $79,680 $-24,539 $55,14114yr $137,885 $28,189 $25,700 $83,995 $-26,247 $57,74815yr $143,400 $28,189 $26,729 $88,482 $-28,303 $60,17916yr $149,136 $28,189 $27,798 $93,149 $-36,784 $56,36517yr $155,102 $28,189 $28,910 $98,003 $-39,465 $58,53818yr $161,306 $28,189 $30,066 $103,051 $-42,253 $60,79819yr $167,758 $28,189 $31,269 $108,300 $-45,152 $63,14820yr $174,468 $28,189 $32,519 $113,760 $-48,168 $65,59221yr $181,447 $28,189 $33,820 $119,438 $-51,303 $68,13522yr $188,705 $28,189 $35,173 $125,343 $-54,563 $70,78023yr $196,253 $28,189 $36,580 $131,484 $-57,955 $73,52924yr $204,103 $28,189 $38,043 $137,871 $-61,481 $76,39025yr $212,267 $28,189 $39,565 $144,513 $-65,149 $79,364

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Who pays the cost (1st year)?

Tenant100%

Projections over 25 years

Year Interest Rental Total Rent Tax credit Cashcosts expenses cost (tenant) (taxman) (you)

1yr $28,189 $15,435 $43,624 $82,810 $-5,815 $-33,3712yr $28,189 $16,052 $44,242 $86,122 $-6,109 $-35,7723yr $28,189 $16,695 $44,884 $89,567 $-8,210 $-36,4744yr $28,189 $17,362 $45,551 $93,150 $-10,056 $-37,5435yr $28,189 $18,057 $46,246 $96,876 $-11,796 $-38,8346yr $28,189 $18,779 $46,968 $100,751 $-13,815 $-39,9687yr $28,189 $19,530 $47,719 $104,781 $-15,317 $-41,7458yr $28,189 $20,311 $48,501 $108,972 $-16,759 $-43,7139yr $28,189 $21,124 $49,313 $113,331 $-18,227 $-45,791

10yr $28,189 $21,969 $50,158 $117,864 $-19,732 $-47,97411yr $28,189 $22,848 $51,037 $122,579 $-21,285 $-50,25712yr $28,189 $23,762 $51,951 $127,482 $-22,892 $-52,64013yr $28,189 $24,712 $52,901 $132,581 $-24,539 $-55,14114yr $28,189 $25,700 $53,890 $137,885 $-26,247 $-57,74815yr $28,189 $26,729 $54,918 $143,400 $-28,303 $-60,17916yr $28,189 $27,798 $55,987 $149,136 $-36,784 $-56,36517yr $28,189 $28,910 $57,099 $155,102 $-39,465 $-58,53818yr $28,189 $30,066 $58,255 $161,306 $-42,253 $-60,79819yr $28,189 $31,269 $59,458 $167,758 $-45,152 $-63,14820yr $28,189 $32,519 $60,708 $174,468 $-48,168 $-65,59221yr $28,189 $33,820 $62,009 $181,447 $-51,303 $-68,13522yr $28,189 $35,173 $63,362 $188,705 $-54,563 $-70,78023yr $28,189 $36,580 $64,769 $196,253 $-57,955 $-73,52924yr $28,189 $38,043 $66,232 $204,103 $-61,481 $-76,39025yr $28,189 $39,565 $67,754 $212,267 $-65,149 $-79,364

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0 1 2 3 4 5 6 7 8 9 100.00

10.00

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50.00

60.00

70.00

80.00

90.00

100.00

Year from purchase

(%) Who pays the costs (10 years)

Tenant (100%)Taxman (0%)

You (0%)

Average contribution (10 years)

Tenant

100%