Location: Gold Beach, OR
The property under consideration is located in Gold Beach, Oregon and is positioned on a riverfront. The described property has 3 residential and 3 commercial rental units. The asking price of the property is $599,000.
For the purpose of determining the viability of investment, a thorough analysis was performed on the potential investment property. Data was collected from various sources to compute the numbers in the analysis. The analysis was carried over a ten year span with expected major remodeling required at the ten year mark. A projected income statement, balance sheet, free cash flows, internal rate of return and weighted average cost of capital were computed using the following assumptions:
- Purchase price of property $549,000 (after negotiation)
- Average residential rent per square foot $0.94
- Average commercial rent per square foot $1.54
- 20% equity 80% debt
- 7% interest rate on 30 year mortgage
- Building and property values to appreciate/depreciate independently
- Other assumptions made, details on spreadsheet
In conclusion, our analysis proved that the potential investment property would be a sound investment given the assumptions used. Based upon the analysis, the property is a viable investment up to a price of about $992,469.99.