Location: Hillsboro, OR
For Sale Website:
The accompanying spreadsheet provides an analysis for the Johnson Street Apartments, a fourplex located in Hillsboro, Oregon and currently listed for $299,900. The spreadsheet includes a pro forma income statement and balance sheet. Armed with assumptions gathered from comparable properties in the area, we computed the internal rate of return and a weighted average cost of capital analysis for the property. Our model can be easily modified to provide insight into multiple scenarios by changing key values throughout.
Based on our assumptions, we discovered the Johnson Street Apartments to have a weighted average cost of capital of 5.09% and an internal rate of return of 7.51%. This means that the apartments are returning 2.41% more than the investors are expecting. We attempted to adjust the debt to equity ratio in order to make the WACC and IRR equal, but unfortunately found no realistic numbers that would allow this.
As a result of our analysis, we believe that the current asking price of $299,900 is very fair for the Johnson Street Apartments, as the apartments are forecasted to garner returns well above what investors would require. We can confidently recommend the Johnson Street Apartments as a good investment.