Harmony 222 For Sale - Harmony Condominiums Cabarete

Transcription

Harmony Condominiums - 222
Pelican Beach, Calle Los Pinos
Cabarete, Dominican Republic
Ocean-Front
4-Bedroom, 3-Bath
263 m2 / 2,380 sf + Garage
Second Floor of Four
Elevator Building
Presented by
Ocean 1 Real Estate
William Holden, CCIM
809.571.0072
[email protected]
Plaza Ocean One, No. 3318
Calle Principal, Cabarete
Puerto Plata, Dominican Republic
Ocean 1 Real Estate
809.571.0072
Income, Expenses & Cash Flow
Gross Scheduled Income
Total Vacancy and Credits
Operating Expenses
Annual Reserves:
Net Operating Income (NOI)
$
$
$
$
$
MIP Payments
Annual Reserves:
Debt Service:
$
$
$
Cash Flow Before Taxes
$
60,000
(3,000)
(17,683)
39,317
Purchase/Asking Price
Improvements
Other
Closing Costs
Finance Points
$
Total Acquisition Cost
$
Mortgage (s)
$
Down Payment / Investment
$ 851,760
(4,277)
$
6,760
851,760
1
$
851,760
$
263
3,238.63
$
$
60,000
(17,683)
35,040
Loan Information
Rental Growth Rate:
2.00%
Down Payment: $
Expense Growth Rate:
1.00%
Initial Loan Balance: $
Appreciation Rate
0.00%
Marginal Tax Rate:
34.00%
Capital Gain Tax Rate:
21.00%
Financial Measurements
Debt Coverage Ratio (DCR)
Loan-to-Value Ratio (LVR)
Loan Amount
$
$
$
Year 1
Year 3
851,760
0.00%
0
0
0
Payment
$0
$0
$0
Projected Cash Flow Before Taxes
0.0%
Capitalization Rate Based on Cost
Capitalization Rate Based on Resale Price
4.62%
4.36%
4.84%
4.19%
5.33%
3.83%
$46,000
Gross Rent Multiplier
14.08
15.77
17.53
$43,000
(30,934)
(18,096)
(13,678)
9,789
4.62%
4.11%
4.84%
4.31%
5.33%
4.63%
Internal Rate of Return - Before Taxes
Internal Rate of Return - After Taxes
7.39%
5.42%
8.34%
6.39%
Modified Internal Rate of Return - Before Taxes
Modified Internal Rate of Return - After Taxes
7.09%
5.21%
7.46%
5.75%
5.00%
100.00%
0.00%
Term
Year 7
16,620
73,087
% of Cost
100.80%
0.00%
5.00%
4.00%
0.0%
8.00%
% of Asking
Interest Rate
0.0%
Cash on Cash Return - Before Taxes
Cash on Cash Return - After Taxes
Condo
-
Assumptions
Net Present Value (NPV) - B/ Taxes
Net Present Value (NPV) - A/Taxes
Property Type
No. of Units
Price Per Unit
Total Sqm
Price Per Sqm
Income per Unit
Expenses per Unit
845,000
39,317
Income Taxes: Benefit (Expense) @ 34%
Cash Flow After Taxes
Property Overview
$45,000
$44,000
$42,000
$41,000
$40,000
$39,000
$38,000
$37,000
$36,000
1
2
3
4
5
6
Disclaimer: All information presented is believed to be accurate.
The information, calculations and data presented in this report are believed to be accurate but are not guaranteed. The information contained in this report shall not be considered as a substitution for legal,
accounting or other professional advice. Please seek proper legal and tax advice as appropriate before making investments.
7
Property Description
Harmony 222 is a beautiful 4-Bedroom, 3-Bath ocean-front
apartment with a garage situated on the second floor in Building
2 of Harmony Condominiums. The terrace overlooks lush
gardens and an ocean-front infinity pool. This quality residence
is front-row center for adventures in kite-boarding, wind-surfing,
and small-boat sailing. The private courtyard conveys more of a
residential feel as opposed to a rental condominium.
HIGHLIGHTS
Ocean-Front
Infinity Pool & Lush Gardens
High Ceilings Throughout
Marble Floors Throughout
Granite Counter Tops
Large Living and Dining Areas
Harmony Condominiums are situated in the center of Cabarete
Bay which is internationally known as a paradise for windsurfers,
kiteboarders and small craft sailors. The bay of Cabarete is a
half-moon shape and the Harmony infinity pool, and beach area
are front-row center for everything. The ocean view to the left is
filled with colorful kite boarders. The view to the right is filled with
wind surfers going to and from Bozo Beach.
Once outside the gated gardens of this beautiful vacation rental,
everything is within short walking distance. The beach of
Cabarete Bay is a colorful and has varied scenes of windsurfers,
kiteboarders, beach combers, and sun bathers. The village of
Cabarete runs along the beach of Cabarete Bay and is lined with
restaurants, points of interest, and plentiful shops to visit.
Harmony Condominiums are often referred to as one of the most
exclusive and prestigious addresses in all of Cabarete. It
consists mainly of 4-bedroom condominiums which are ideally
suited for families and groups of people who want real luxury.
Some of the apartments can be converted to a 2- or 3-bedroom
rentals. The unique ocean-front floor plans are spacious with
spectacular ocean views. There is a maximum of four (4) stories
at Cabarete Bay, and Harmony Condominiums is one of the few
resorts where all buildings have elevators.
Ocean 1 Real Estate
809.571.0072
[email protected]
Enter Description
Enter Description
Enter Description
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Enter Description
Enter Description
Enter Description
1
809.571.0072
Harmony Condominiums
Center of Cabarete Bay
Sales Date
December 31, 2011
Sales Price
$800,000
Number of Units
Price Per Unit
1
$
800,000
Sqm
Unit Type
No. of
Units
Sqm Per
Unit
4 Bed 3 Bath
1
263
263
Price Per Sqm
$ 3,042
Building Class
Location
Rent
$
4,500
Rent Sqm
$
17
A
Ocean-Front - 3rd Floor
Year Built
2009
Owner desired to downsize and another client holding 2-bedroom valued at $300,000 desired to upgrade. So, we put a deal
together whereby the 2-bedroom owner transferred title and gave $500,000 in cash to purchase the Harmony unit.
2
Sales Date
Sales Price
April 30, 2012
$
Number of Units
Price Per Unit
1
$
Sqm
Price Per Sqm
Building Class
Location
Year Built
799,000
799,000
Unit Type
No. of
Units
Sqm Per
Unit
3 Bed 3 Bath
1
263
263
$
3,038
Rent
$
5,000
Rent Sqm
$
A
Ocean-Front - 3rd Floor
2009
Long-time client rented various condominiums over the years and finally decided to buy this beautifully furnished oceanfront condominium. It was an all-cash deal.
19
3
809.571.0072
Sales Date
June 8, 2012
Sales Price
$750,000
Number of Units
Price Per Unit
1
$
Sqm
Price Per Sqm
Building Class
Location
Year Built
750,000
Unit Type
No. of
Units
Sqm Per
Unit
4 Bed 3 Bath
1
263
263
$
2,852
A
Ocean-Front 1st Floor
2009
Rent
$
5,000
Rent Sqm
$
19
1
809.571.0072
Millennium Resort
Listing Date
December 31, 2011
List Price
$1,325,000
Number of Units
1
Price Per Unit
Unit Type
No. of
Units
Sqm Per
Unit
31 Bed 3 Bath
1
370
$1,325,000
Sqm
Rent
Rent Sqm
370
Price Per Sqm
$ 3,581
Building Class
Location
$
7,000
$
19
A
Ocean-Front 4th Floor
Year Built
2010
Millennium Resort is run more like a hotel and is predominantly short-term rental. Harmony Condominiums, on the other
hand, is more residential in nature but is still offered as a vacation rental resort.
2
Ocean One Condominiums
Listing Date
List Price
August 1, 2012
$
Number of Units
Price Per Unit
1
$
Sqm
Price Per Sqm
Building Class
Location
Year Built
1,295,000
Unit Type
No. of
Units
Sqm Per
Unit
3 Bed 3 Bath
1
362
1,295,000
Rent
Rent Sqm
362
$
3,577
A
Ocean-Front 4th Floor
2009
The price of this sale comparable was reduced $400,000 from the original price of $1,695,000.
$
6,500
$
18
3
809.571.0072
Listing Date
6/31/2012
List Price
$925,000
Number of Units
Price Per Unit
1
$
Sqm
Price Per Sqm
Building Class
Location
Year Built
Unit Type
No. of
Units
Sqm Per
Unit
3 Bed 3 Bath
1
263
925,000
Rent
Rent Sqm
263
$
3,517
$
5,000
$
A
Ocean-Front 1st Floor
2009
This owner combines personal use with short-term rental availablity. Seller reduced the price from $975,000 but is not
motivated to accept less than the current asking price.
19
809.571.0072
Year 1
Potential Rental Income
$
Less: Vacancy & Credit Losses
Year 2
Sqm
60,000
(3,000)
228.14
$
-11.41
Year 3
Sqm
61,200
(3,060)
232.70
$
-11.63
Year 4
Sqm
62,424
(3,121)
237.35
$
-11.87
Year 5
Sqm
63,672
(3,184)
242.10
$
-12.11
Sqm
64,946
(3,247)
246.94
-12.35
Effective Rental Income
$
57,000
216.73
$
58,140
221.06
$
59,303
225.49
$
60,489
230.00
$
61,699
234.60
Gross Operating Income
$
57,000
216.73
$
58,140
221.06
$
59,303
225.49
$
60,489
230.00
$
61,699
234.60
Operating Expenses
150
6,348
4,560
1,300
600
825
3,000
720
180
Accounting
Association Fees
Commissions
Insurance
Repairs
Property Taxes
Electricity
Telephone / Internet
Cable TV
152
6,411
4,606
1,313
606
833
3,030
727
182
0.57
24.14
17.34
4.94
2.28
3.14
11.41
2.74
0.68
153
6,476
4,652
1,326
612
842
3,060
734
184
0.58
24.38
17.51
4.99
2.30
3.17
11.52
2.77
0.69
155
6,540
4,698
1,339
618
850
3,091
742
185
0.58
24.62
17.69
5.04
2.33
3.20
11.64
2.79
0.70
156
6,606
4,745
1,353
624
858
3,122
749
187
0.59
24.87
17.86
5.09
2.35
3.23
11.75
2.82
0.71
0.59
25.12
18.04
5.14
2.37
3.26
11.87
2.85
0.71
Total Operating Expenses
$
17,683
67.24
$
17,860
67.91
$
18,038
68.59
$
18,219
69.27
$
18,401
69.97
$
39,317
149.49
$
40,280
153.16
$
41,264
156.90
$
42,270
160.72
$
43,298
164.63
Cash Flow Before Taxes
$
39,317
149.49
$
40,280
153.16
$
41,264
156.90
$
42,270
160.72
$
43,298
164.63
© 1993 - 2011 Cash Flow Analyzer®
RentalSoftware.com
809.571.0072
Rental Activity Analysis
Year 1
Potential Rental Income
Less: Vacancy & Credit Losses
Less: Operating Expenses
$
$
Year 2
60,000 $
(3,000)
(17,683)
39,317
Less: Annual Debt Service
$
-
CASH FLOW Before Taxes
$
Income Taxes: Benefit (Expense) @ 34%
39,317
$
35,040
61,200 $
(3,060)
(17,860)
40,280
$
$
(4,277)
CASH FLOW After Taxes
Year 3
62,424 $
(3,121)
(18,038)
41,264
$
40,280
$
36,071
41,264
42,270
36,721
$
$
(4,544)
$
Year 5
63,672 $
(3,184)
(18,219)
-
(4,209)
$
Year 4
43,298
-
42,270
$
(4,886)
$
64,946
(3,247)
(18,401)
37,384
43,298
(5,235)
$
38,063
Property Resale Analysis
Projected Sales Price
Less: Selling Expenses
Adjusted Projected Sales Price
$
901,250 $
(54,075)
937,300 $
(56,238)
984,165 $
(59,050)
$
847,175
881,062
925,115
Less: Mortgage(s) Balance Payoff
$
-
SALE PROCEEDS Before Taxes
$
Income Taxes: ReSale: Benefit (Expense) @ 21%
847,175
$
(6,867)
SALE PROCEEDS After Taxes
$
$
$
1,043,215 $
(62,593)
980,622
-
881,062
$
(23,091)
925,115
$
$
(40,992)
$
857,971
$
884,124
$
35,040
$
36,071
$
36,721
$
1,039,459
-
980,622
$
(61,297)
840,308
1,105,808
(66,348)
1,039,459
(82,302)
919,325
$
37,384
$
957,157
Cash Position
Cash Generated in Current Year
$
Cash Generated in Previous Years
n/a
Cash Generated from Property Sale
Original Initial Investment
840,308
(851,760)
Total Potential CASH Generated
$
23,588
35,040
71,111
857,971
(851,760)
$
77,322
884,124
(851,760)
$
140,195
$
38,063
107,832
145,216
919,325
(851,760)
957,157
(851,760)
212,781
$
288,676
Financial Measurements
Capitalization Rate Based on Cost
4.62%
4.73%
4.84%
4.96%
5.08%
Capitalization Rate Based on Resale Price
4.36%
4.30%
4.19%
4.05%
3.92%
Net Present Value (NPV) - Before Taxes
8.00%
(30,934)
(25,453)
(13,678)
3,792
19,911
Net Present Value (NPV) - After Taxes
5.00%
(18,096)
(7,466)
9,789
33,137
56,587
Cash-on-Cash Return - Before Taxes
2.77%
4.62%
6.39%
4.73%
7.33%
4.84%
8.21%
4.96%
8.26%
5.08%
Cash-on-Cash Return - After Taxes
4.11%
4.23%
4.31%
4.39%
4.47%
Internal Rate-of-Return (IRR)
- Before Taxes
4.08%
6.34%
7.39%
8.13%
8.54%
Internal Rate-of-Return (IRR)
- After Taxes
2.77%
4.53%
5.42%
6.07%
6.47%
Cash-on-Cash Return with Equity
Modified Internal Rate-of-Return (MIRR)
- Before Taxes
4.08%
6.20%
7.09%
7.65%
7.90%
Modified Internal Rate-of-Return (MIRR)
- After Taxes
2.77%
4.44%
5.21%
5.73%
6.01%
9/5/12 5:10 PM
© 1993 - 2011 Cash Flow Analyzer®
RentalSoftware.com
Notes and Discussion
FINANCIAL DATA - The financial data enclosed with this report may not be important for the allcash buyer with no desire for rental income. However, this analysis establishes a reasonable
price entry-point and a basis for an exit strategy. In other words, this financial data may be
important to investor-types who are interested in financial data during the re-sale process.
SALE PRICE - The current asking price has been established by an analysis of the following
methods, all of which are inter-related:
- Cost Approach - building costs in the multi-family category are determined by developers, and
at present, building costs are in the $2,000 to $2,500/m2 range depending on location.
Additional costs for furnishings, accessories, and appliances are in the $275 to $300 / m2
range. Although there are new-construction properties coming available, the locations will not
be as prime as Harmony Condominiums in the center of Cabarete Bay.
- Income Approach - the income approach can be a moving target based seasonal adjustments
and world-wide economic conditions. However, the financial data presented are reasonable
expectations of what could be achieved, without making any guarantees.
- Market Data Approach - the sales comparables used represent both recent sales and current
listings for sale. The north coast of the Dominican Republic is unique in that there is little
mortgage financing available. Thus, most acquisitions are made in cash. This is a negative on
the one hand, because the re-sale market is smaller due to the all-cash requirements. However,
on the flip side, all-cash purchases mean there are no panic sales to satisfy mortgage
payments or pay property taxes. Thus, the market is more stable as owners have more holding
power than owners who are heavily financed.
CONCLUSION - The sale price of $845,000 was established to set up a reasonable Capitalization
Rate and Internal Rate of Return (IRR) based on other market alternatives. This rate of return is
determined by two separate cash flows. First, the cash flows from rental income. Second, the
cash flow from net proceeds of sale. Therefore, to accomplish the desired rate of return, the
current asking price was lowered to allow room for "upside" upon resale. These projected cash
flows from net rental income and net proceeds of sale are included in other sections of this
report.
Ocean 1 Real Estate
809.571.0072
[email protected]
About Us
Ocean 1 Real Estate
[email protected]
809.571.0072
William was an airline captain for 37 years. He started with Trans World Airlines (TWA) and
spent the last few years of his career as a captain for American Airlines.
During those years as a pilot, he was also a real estate developer in Vail, Colorado, USA from
1972 to 1986. During that time, he developed multi-family condominiums and townhomes in a
ski resort and golf course setting. In addition, he acted as general contractor, architect,
marketing director, sales manager and property manager for all properties he developed.
From 1986 to 2001, Mr. Holden was a real estate appraiser in St. Louis, Missouri, USA. He
primarily did appraisals and investment analysis on shopping centers, office buildings,
industrial office warehouses, and residential apartment properties.
From 2001 to 2005, Mr. Holden had an asset management company and provided mortgage
financing and investment advising as a registered investment adviser with a Series 7
securities license. He also specialized in allocating IRA/401k retirement funds to investment
real estate.
From 2005 to present, Mr. Holden has made numerous investments in multi-family residential
real estate on the north coast of the Dominican Republic. In addition to managing his own
properties, he set up a full-service real estate company in Cabarete that includes property
management, rental management, sales, and guest services. The guest services department
assists rental guests in activities and local excursions. He has also established online
reservations system to enhance rentals on the world wide web.
Cell Phone = (829) 962-6644.
Terms & Definitions
Net Operating Income (NOI) is a property’s gross rental income reduced by all expenses except for loan payments,
income taxes, mortgage insurance premium (MIP) payments and sometimes funded reserves.
Debt Coverage Ratio (DCR) is a property’s net operating income divided by the amount of debt payments. Lenders use
this calculation to determine the remaining operating cash flow after the debt payments.
Loan-to-Value Ratio (LTV) is the outstanding debt divided by the value of the property. This ratio is used to determine
the amount of leverage and property equity. The debt balance can be the beginning or end-of-year balance. The
property value used can be the contract price or the fair market value at the end of the year.
Capitalization Rate (Cap Rate) is the net operating income (NOI) divided by either the property’s contract purchase
price or its fair market value.
Cash-on-Cash Return is the net cash flow divided it by the initial investment (down payment). The calculation does not
take into account the time value of money or change in the property’s equity.
Cash-on-Cash Return with Equity Build-up modifies the cash-on-cash return calculation by adding the property’s net
change in equity for that year to the numerator and adding all previously generated equity to the denominator of the cashon-cash return ratio. The calculation calculates the return on the property equity, i.e. the return on the cash that is “tied
up” in the property.
Net Present Value (NPV) converts future dollars into present-day dollars by discounting (reducing) the future cash flow
of a property by a given rate or percentage. The initial investment (down payment) is subtracted from the discounted
dollars to derive the NPV. A positive NPV means that the property will generate a higher return than the given rate or
percentage used to calculate the NPV amount.
Gross Rent Multiplier (GRM) is a property’s fair market value divided by its gross rental income.
Mortgage Insurance Premium (MIP) Payments are insurance premiums charged by a lender to protect that lender
against loss from a mortgager's default. The rates are charged on the balance of the loan and may be paid annually,
monthly, or in some combination of the two (split premiums).
Internal Rate-of-Return (IRR) is the most widely used method of valuing a property’s annual cash flow stream. Since a
property’s cash flow is earned in the future, those future dollars must be converted to present-day dollars. The IRR
calculation discounts (reduces) the property’s future cash flow at a rate (i.e. percentage) so that the sum of all cash flow
for a specified time period is equal to the initial investment. The rate or percentage needed to do that is the IRR. In other
words, IRR is the discount rate at which Net Present Value (NPV) is zero.
Modified Internal Rate-of-Return (MIRR) modifies the IRR to avoid the drawbacks of the traditional IRR. The IRR
implicitly assumes that all cash flow is either reinvested or discounted at the computed IRR rate. In reality, a property’s
cash flow probably will not be reinvested at the computed IRR rate, but rather earn zero or a small amount of interest.
The MIRR eliminates the reinvestment assumption by utilizing user stipulated reinvestment and borrowing rates.
Ocean 1 Real Estate
809.571.0072
[email protected]

Harmony 222 For Sale - Harmony Condominiums Cabarete

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