Property Assumptions:

• Purchase price: $27,500,000
• Acquisition costs: $1,000,000
• Property Type: Multi-Family
• Year one potential rental income: $3,505,512
• Annual PGI growth rate: 1.75 percent
• Vacancy and credit losses: 5.25 percent of rental income ONLY
• Other income: $12,200
• Other income annual growth rate: 1.25 percent
• Operating expenses: 45% of EGI
• Land/improvement allocation:
  • Land: 20 percent
  • Improvements: 80 percent
• Disposition price: capitalize sixth year NOI at 5.50 percent to determine EOY five disposition price
• Disposition cost of sale: 6 percent
• Purchase in January and sell in December of respective years.

Financing Assumptions:

• Loan amount: the loan will be the lesser of the amounts calculated using LTV ratio and DSCR
• Maximum LTV ratio: 70 percent
• Minimum DSCR: 1.30
• Interest rate: 4.25 percent
• Amortization period: 20 years
• Loan term: 7 years
• Payments per year: 12
• Loan costs
  • Lenders discount points: 1.2 percent of loan amount
  • Third party cost: $75,000

Investor Assumptions:

• Anticipated holding period: 5 years
  • Investors tax rates
  • Ordinary income: 37 percent
  • Capital gain from cost recovery taken: 25 percent
  • Capital gain from appreciation:20 percent
  • Weighted Cost of Capital: 11%

Provide a full financial model and analysis with Levered and Unlevered NPV, and IRR for Before, Levered After Tax of the same and Cash on Cash for Before Tax Levered and Unlevered (No need to provided unlevered After Tax NPV, IRR or Cash on Cash). Then state if this is a financially wise investment.