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Updated about 7 years ago on . Most recent reply
Cash Flow Including Cap Ex vs Cash Flow Without Cap Ex -Criteria
What's up BP,
Do you guys have a different set criteria for your analysis when it comes to CASH FLOW including CAP EX vs CASH FLOW without CAP EX or do you just base your analysis including CAP EX.
Quick Example,
Running analysis on an 11 Unit Building.
| Purchase Details | % Purchase Price | One Time | Monthly | Annual |
| Full Market Value | $400,000 | |||
| Assessed Value: | $325,000 | |||
| Purchase Price Percent of Market Value: | 92.31% | |||
| Purchase Price: | $300,000 | |||
| Equity at Purchase: | $100,000.00 | |||
| Down Payment: | 20% | $60,000.00 | ||
| Mortgage Amount: | 80% | $240,000.00 | ||
| Mortgage Length: | 300 | 25 | ||
| Mortgage APR: | 7.0% | |||
| Mortgage Payment (Principal Payment) | $1,696.27 | $20,355.24 | ||
| Closing Costs: | 2.0% | $6,000.00 | ||
| Renovation Costs: | 3% | $10,000 | ||
| Out of Pocket Costs: | 25% | $76,000 | ||
| Total Renovated Cost: | 103% | $310,000 | ||
| Rental Information | % | # Units | Monthly | Annual |
| 2% Rent of Purchase Price: | 2% | $6,000 | $72,000 | |
| 2% Rent of Renovation Cost: | 2% | $6,200 | $74,400 | |
| # Units: | 11 | |||
| Unit 1 Rent: | 0.17% | $525 | $6,300 | |
| Unit 2 Rent: | 0.16% | $500 | $6,000 | |
| Unit 3 Rent: | 0.17% | $525 | $6,300 | |
| Unit 4 Rent: | 0.16% | $500 | $6,000 | |
| Unit 5 Rent: | 0.15% | $450 | $5,400 | |
| Unit 6 Rent: | 0.20% | $625 | $7,500 | Owner pays gas, water & electric |
| Unit 7 Rent: | 0.31% | $950 | $11,400 | Owner pays gas & electric |
| Unit 8 Rent: | 0.31% | $950 | $11,400 | Owner pays gas, water & electric |
| Unit 9 Rent: | 0.31% | $950 | $11,400 | Owner pays gas & water |
| Unit 10 Rent: | 0.21% | $650 | $7,800 | Owner pays gas & water |
| Unit 11 Rent: | 0.21% | $650 | $7,800 | Owner pays gas & water |
| Gross Scheduled Income (GSI): | 2.35% | $7,275 | $87,300 | |
| Vacancy % | 5.00% | 5.00% | ||
| Vacancy (V) | 0.12% | $363.75 | $4,365.00 | |
| Gross Operating Income (GOI) | 2.23% | $6,911.25 | $82,935.00 | |
| Average Rent/Unit: | 0.59% | 661.36 | $2,236 | |
| Calculated Financials | % | Monthly | Annual | |
| Estimated Operating Expenses (OE): | ($3,255.22) | ($39,062.69) | ||
| Estimated Net Operating Income (NOI): | $3,656.03 | $43,872.31 | ||
| Annual Debt Service (ADS): | $1,696.27 | $20,355.24 | ||
| Capital Expenditures | $1,747.54 | $20,970.50 | ||
| Estimated Cashflow: | $212.21 | $2,546.57 | ||
| Estimated Cashflow per Unit W / Cap Ex | $19.29 | $231.51 | ||
| Estimated Cashflow per Unit W / O Cap Ex | $1,959.76 | $23,517.07 | ||
| ROI Based on Downpayment | 0.35% | 4.24% | ||
| ROI Based on Out of Pocket Costs | 0.28% | 3.35% | ||
| Additional Analysis | % | One Time | Monthly | Yearly |
| Purchase Price Per Unit | $27,272.73 | |||
| Renovated Price Per Unit | $28,181.82 | |||
| Gross Rent Multiplier (GRM) | 3.44 | |||
| Capitalization Rate | 14.62% | |||
| Debt Coverage Ratio | 2.16% | |||
| Purchase Property? | Value | Answer | Monthly | Yearly |
| Is GSI > 2% Renovated Price? | $87,300 | YES | ||
| Is Cashflow per Unit > $250/month? | $19.29 | NO | ||
| Is Debt Coverage Ratio (DCR) > 1.2? | 2.16% | YES | ||
| Purchase Property? | NO | |||
| Purchase Price: |
This is just a quick property overview from the analysis. Just looking for your opinion on how you guys treat CASH FLOW including CAP EX vs CASH FLOW w/o CAP EX and how you have your criteria set around this.
Here is a quick look at the CAP EX numbers for the property and how we include CAP EX
| Capital Expenditures | Cost | Lifespan (Years) | Annual (Cost) | Monthly (Cost) | |
| General | Furnace #1 (153 W Seneca St) | $1,500.00 | 12 | $125.00 | $10.42 |
| Boiler #1 (152 W Seneca St) | $2,500.00 | 15 | $166.67 | $13.89 | |
| Water Heater #1 (153 W Seneca St) | $850.00 | 10 | $85.00 | $7.08 | |
| Water Heater #2 (153 W Seneca St) | $850.00 | 10 | $85.00 | $7.08 | |
| Water Heater #3 (153 W Seneca St) | $850.00 | 10 | $85.00 | $7.08 | |
| Water Heater #4 (153 W Seneca St) | $850.00 | 4 | $212.50 | $17.71 | |
| Water Heater #5 (153 W Seneca St) | $850.00 | 10 | $85.00 | $7.08 | |
| Water Heater #6 (152 W Seneca St) | $850.00 | 6 | $141.67 | $11.81 | |
| Water Heater #7 (152 W Seneca St) | $850.00 | 6 | $141.67 | $11.81 | |
| Roof #1 (153 W Seneca St) | $40,000.00 | 27 | $1,481.48 | $123.46 | |
| Roof #2 (152 W Seneca St) | $22,000.00 | 23 | $956.52 | $79.71 | |
| Kitchen #1 (153 W Seneca St) | $8,000.00 | 10 | $800.00 | $66.67 | |
| Kitchen #2 (153 W Seneca St) | $8,000.00 | 10 | $800.00 | $66.67 | |
| Kitchen #3 (153 W Seneca St) | $8,000.00 | 10 | $800.00 | $66.67 | |
| Kitchen #4 (153 W Seneca St) | $8,000.00 | 10 | $800.00 | $66.67 | |
| Kitchen #5 (153 W Seneca St) | $8,000.00 | 10 | $800.00 | $66.67 | |
| Kitchen #6 (153 W Seneca St) | $8,000.00 | 10 | $800.00 | $66.67 | |
| Kitchen #7 (153 W Seneca St) | $8,000.00 | 10 | $800.00 | $66.67 | |
| Kitchen #8 (152 W Seneca St) | $8,000.00 | 10 | $800.00 | $66.67 | |
| Kitchen #9 (152 W Seneca St) | $8,000.00 | 10 | $800.00 | $66.67 | |
| Kitchen #10 (152 W Seneca St) | $8,000.00 | 10 | $800.00 | $66.67 | |
| Kitchen #11 (152 W Seneca St) | $8,000.00 | 10 | $800.00 | $66.67 | |
| Bathroom #1 (153 W Seneca St) | $3,500.00 | 15 | $233.33 | $19.44 | |
| Bathroom #2 (153 W Seneca St) | $3,500.00 | 15 | $233.33 | $19.44 | |
| Bathroom #3 (153 W Seneca St) | $3,500.00 | 15 | $233.33 | $19.44 | |
| Bathroom #4 (153 W Seneca St) | $3,500.00 | 15 | $233.33 | $19.44 | |
| Bathroom #5 (153 W Seneca St) | $3,500.00 | 15 | $233.33 | $19.44 | |
| Bathroom #6 (153 W Seneca St) | $3,500.00 | 15 | $233.33 | $19.44 | |
| Bathroom #7 (153 W Seneca St) | $3,500.00 | 15 | $233.33 | $19.44 | |
| Bathroom #8 (152 W Seneca St) | $3,500.00 | 15 | $233.33 | $19.44 | |
| Bathroom #9 (152 W Seneca St) | $3,500.00 | 15 | $233.33 | $19.44 | |
| Bathroom #10 (152 W Seneca St) | $3,500.00 | 15 | $233.33 | $19.44 | |
| Bathroom #11 (152 W Seneca St) | $3,500.00 | 15 | $233.33 | $19.44 | |
| Appliances #1 (153 W Seneca St) | $1,600.00 | 15 | $106.67 | $8.89 | |
| Appliances #2 (153 W Seneca St) | $1,600.00 | 8 | $200.00 | $16.67 | |
| Appliances #3 (153 W Seneca St) | $1,600.00 | 8 | $200.00 | $16.67 | |
| Appliances #4 (153 W Seneca St) | $1,600.00 | 8 | $200.00 | $16.67 | |
| Appliances #5 (153 W Seneca St) | $1,600.00 | 8 | $200.00 | $16.67 | |
| Appliances #6 (153 W Seneca St) | $1,600.00 | 8 | $200.00 | $16.67 | |
| Appliances #7 (153 W Seneca St) | $1,600.00 | 8 | $200.00 | $16.67 | |
| Appliances #8 (152 W Seneca St) | $1,600.00 | 8 | $200.00 | $16.67 | |
| Appliances #9 (152 W Seneca St) | $1,600.00 | 8 | $200.00 | $16.67 | |
| Appliances #10 (152 W Seneca St) | $1,600.00 | 8 | $200.00 | $16.67 | |
| Appliances #11 (152 W Seneca St) | $1,600.00 | 8 | $200.00 | $16.67 | |
| Windows #1 (153 W Seneca St) | $12,500.00 | 20 | $625.00 | $52.08 | |
| Windows #2 (152 W Seneca St) | $8,000.00 | 20 | $400.00 | $33.33 | |
| Plumbing #1 (153 W Seneca St) | $8,000.00 | 25 | $320.00 | $26.67 | |
| Plumbing #2 (152 W Seneca St) | $8,000.00 | 25 | $320.00 | $26.67 | |
| Electrical #1 (153 W Seneca St) | $10,000.00 | 30 | $333.33 | $27.78 | |
| Electrical #2 (152 W Seneca St) | $10,000.00 | 10 | $1,000.00 | $83.33 | |
| Structure - Foundation / Framing (153 W Seneca St) | $15,000.00 | 50 | $300.00 | $25.00 | |
| Structure - Foundation / Framing (152 W Seneca St) | $15,000.00 | 50 | $300.00 | $25.00 | |
| Parking/Driveway #1 (153 W Seneca St) | $5,000.00 | 30 | $166.67 | $13.89 | |
| Parking/Driveway #2 (152 W Seneca St) | $5,000.00 | 30 | $166.67 | $13.89 | |
| TOTAL CAPITAL EXPENDITURES | $312,550.00 | 793 | $20,970.50 | $1,747.54 |
Most Popular Reply
Calculating cashflow without accounting for CapEx isn't much different than leaving out vacancy, ongoing maintenance or taxes for that matter. It HAS to be accounted for or you're just fooling yourself.
It also seems that $10,000 in total rehab costs for an 11 unit purchase $100,000 under market value may be a bit hopeful.