Pride of Ownership

4882 Cape May

San Diego, CA 92107

For more information contact:

Brian Nelson, Broker

619-226-6011 x 102
nelson@scc1031.com
01409860

David Cameron
619-226-6011 x106
cashflowsandiego@gmail.com

●
Great Unit Mix

●
Large Lot

●
Garages

●
Well Maintained

●
Seller Financing Available

Phone: 858-779-1000 ● Fax: 866-861-7803 ● 3405 Kenyon St #411 ● San Diego, CA 92110 ● www.scc1031.com
 Table of Contents

Real Estate Investment Details ..................................................................................... 3

Property Description .................................................................................................... 4

Property Photos ............................................................................................................. 5

Maps and Aerials ........................................................................................................... 6

Executive Summary ...................................................................................................... 7

Pro Forma Summary .................................................................................................... 8

Internal Rate of Return Analysis .................................................................................. 9

Cash Flow Analysis ...................................................................................................... 10

Unit Mix Report ............................................................................................................... 12

Detailed General Expenses ............................................................................................ 13

Property Equity Analysis ............................................................................................ 15

Equity vs. Debt ............................................................................................................... 16

 Real Estate Investment Details

ANALYSIS

Analysis Date: May 2010

PROPERTY

Property: Pride of Ownership

Property Address: 4882 Cape May
San Diego, CA 92107

PURCHASE INFORMATION FINANCIAL INFORMATION

Property Type: Multi-Family Down Payment: $1,150,000

Purchase Price: $2,225,000 Closing Costs: $15,000
Fair Market Value: $2,225,000 LT Capital Gain: 34.00%
Units: 10 Federal Tax Rate: 15.0%
Total Rentable Sq. Ft.: 5,850 State Tax Rate: 10.0%
Resale Valuation 5.0% (annual appreciation) Discount Rate: 8.00%
Resale Expenses: 5.0%

LOANS

Debt Term Rate Payment LO Costs

Interest Only $1,075,000 30 yrs 6.0% $5,375

INCOME & EXPENSES CONTACT INFORMATION

Gross Operating Income: $154,783 Brian Nelson, Broker

Monthly GOI: $12,899 01409860
Total Annual Expenses: ($52,160) 619-226-6011 x 102
Monthly Expenses: ($4,347) nelson@scc1031.com

David Cameron
619-226-6011 x106
cashflowsandiego@gmail.com

The calculations and data presented are deemed to be accurate, but not guaranteed. They are intended for the purpose of illustrative projections
and analysis. The information provided is not intended to replace or serve as substitute for any legal, accounting, investment, real estate, tax or
other professional advice, consultation or service. The user of this software should consult with a professional in the respective legal, accounting,
tax or other professional area before making any decisions.

page 3 of 16
Pride of Ownership Property Description
4882 Cape May Brian Nelson, Broker
San Diego, CA 92107 619-226-6011 x 102

Cape May Apartments

This single story courtyard style complex is

situated in a great Ocean Beach location. The
unit mix is comprised of 4 one bedrooms, 4 two
bedrooms, and 2 studio units. Each of the units
have new windows, above average fixtures, and
ceiling fans. This property has nine garages in
which all of the doors have been replaced
recently. The units are individually metered for
gas and electric. This building has been
meticulously maintained throughout the 30 plus
years of the current ownership.

page 4 of 16
Pride of Ownership Property Photos
4882 Cape May Brian Nelson, Broker
San Diego, CA 92107 619-226-6011 x 102

page 5 of 16
Pride of Ownership Maps and Aerials
4882 Cape May Brian Nelson, Broker
San Diego, CA 92107 619-226-6011 x 102

page 6 of 16
Pride of Ownership Executive Summary
4882 Cape May Brian Nelson, Broker
San Diego, CA 92107 619-226-6011 x 102

ACQUISITION COSTS

Purchase Price, Points and Closing Costs $2,240,000

Investment - Cash $1,165,000
First Loan $1,075,000

INVESTMENT INFORMATION

Purchase Price $2,225,000

Price per Unit $222,500
Price per Sq. Ft. $380.34
Income per Unit $15,942
Expenses per Unit ($5,216)

INCOME, EXPENSES & CASH FLOW

Gross Scheduled Income $159,420

Total Vacancy and Credits ($4,637)
Operating Expenses ($52,160)
Net Operating Income $102,623
Debt Service ($64,500)
Cash Flow Before Taxes $38,123

Total Interest (Debt Service) ($64,500)

Depreciation and Amortization ($42,967)
Taxable Income (Loss) ($4,844)
Tax Savings (Costs) $1,211
Cash Flow After Taxes $39,334

FINANCIAL INDICATORS

Cash on Cash Return Before Taxes 3.27%

Optimal Internal Rate of Return (yr 20) 10.47%
Debt Coverage Ratio 1.59
Capitalization Rate 4.61%
Gross Rent Multiplier 13.96
Gross Income / Square Feet $27.25
Gross Expenses / Square Feet ($8.92)
Operating Expense Ratio 33.70%

page 7 of 16
Pride of Ownership Pro Forma Summary
4882 Cape May Brian Nelson, Broker
San Diego, CA 92107 619-226-6011 x 102

UNIT MIX & ANNUAL SCHEDULED INCOME

Type Units Actual Total Market Total
Studio 2 $11,400 $22,800 $11,400 $22,800
1Br/1Ba 4 $13,140 $52,560 $13,140 $52,560
2Br/1Ba 4 $19,800 $79,200 $19,800 $79,200
TOTALS 10 $154,560 $154,560

ANNUALIZED INCOME
Actual Market
INVESTMENT SUMMARY Gross Potential Rent $154,560 $154,560
Price: $2,225,000 Less: Vacancy ($4,637) ($4,637)
Units: 10 Misc. Income $4,860 $4,860
Effective Gross Income $154,783 $154,783
Price/Unit: $222,500
Less: Expenses ($52,160) ($50,973)
RSF: 5,850 Net Operating Income $102,623 $103,810
Price/RSF: $380.34 Debt Service ($64,500) ($64,500)
Cap Rate: 4.61% Net Cash Flow after Debt Service $38,123 $39,310
Principal Reduction $0 $0
Pro Forma Cap Rate: 4.67%
Total Return $38,123 $39,310
GRM: 14.0
Pro Forma GRM: 14.0

ANNUALIZED EXPENSES
Description Actual Market
Gas & Electric $840 $840
FINANCING SUMMARY Water & Sewer $5,400 $5,400
Loan Amount: $1,075,000 Landscaping $3,000 $3,000
Down Payment: $1,150,000 Trash $1,920 $1,920
Loan Type: Interest Only Pest $480 $480
Maintenance $5,000 $5,000
Interest Rate: 6.00000%
Misc. $1,500 $1,500
Term: 30 years Insurance $2,500 $2,500
Monthly Payment: $5,375.00 Taxes $25,143 $23,956
Management Fees $6,377 $6,377

Total Expenses $52,160 $50,973

Expenses Per RSF $8.92 $8.71
Expenses Per Unit $5,216 $5,097

page 8 of 16
Pride of Ownership Internal Rate of Return Analysis
4882 Cape May Brian Nelson, Broker
San Diego, CA 92107 619-226-6011 x 102

BEFORE TAX IRR

Time Future Cash Flows

Initial Investment ($1,165,000)

End of Year 1 $38,123 End of Year 11 $134,786
End of Year 2 $45,808 End of Year 12 $147,305
End of Year 3 $53,878 End of Year 13 $160,449
End of Year 4 $62,351 End of Year 14 $174,250
End of Year 5 $71,247 End of Year 15 $188,742
End of Year 6 $80,589 End of Year 16 $203,958
End of Year 7 $90,397 End of Year 17 $219,935
End of Year 8 $100,696 End of Year 18 $236,711
End of Year 9 $111,510 End of Year 19 $254,325
End of Year 10 $122,864 End of Year 20* $4,806,228

IRR = 12.23% * ($272,820 + $4,533,408)

AFTER TAX IRR

Time Future Cash Flows

Initial Investment ($1,165,000)

End of Year 1 $39,334 End of Year 11 $112,300
End of Year 2 $45,567 End of Year 12 $121,689
End of Year 3 $51,619 End of Year 13 $131,547
End of Year 4 $57,973 End of Year 14 $141,898
End of Year 5 $64,646 End of Year 15 $152,767
End of Year 6 $71,652 End of Year 16 $164,179
End of Year 7 $79,008 End of Year 17 $176,161
End of Year 8 $86,732 End of Year 18 $188,743
End of Year 9 $94,843 End of Year 19 $201,954
End of Year 10 $103,358 End of Year 20* $3,469,546

IRR = 10.47% * ($215,360 + $3,254,186)

page 9 of 16
Pride of Ownership Cash Flow Analysis
4882 Cape May Brian Nelson, Broker
San Diego, CA 92107 619-226-6011 x 102

Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

GROSS SCHEDULED INCOME $159,420 $167,337 $175,650 $184,378 $193,543 $203,166 $213,271 $223,880 $235,020 $246,717
Turnover Vacancy ($4,637) ($4,869) ($5,112) ($5,368) ($5,636) ($5,918) ($6,214) ($6,524) ($6,851) ($7,193)
Total Operating Expenses ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160)

NET OPERATING INCOME $102,623 $110,308 $118,378 $126,851 $135,747 $145,089 $154,897 $165,196 $176,010 $187,364
Loan Payment ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500)

NET CASH FLOW (b/t) $38,123 $45,808 $53,878 $62,351 $71,247 $80,589 $90,397 $100,696 $111,510 $122,864
Cash On Cash Return b/t 3.27% 3.93% 4.62% 5.35% 6.12% 6.92% 7.76% 8.64% 9.57% 10.55%

NET OPERATING INCOME $102,623 $110,308 $118,378 $126,851 $135,747 $145,089 $154,897 $165,196 $176,010 $187,364
Depreciation ($42,967) ($44,841) ($44,841) ($44,841) ($44,841) ($44,841) ($44,841) ($44,841) ($44,841) ($44,841)
Loan Interest ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500)

TAXABLE INCOME (LOSS) ($4,844) $967 $9,037 $17,509 $26,406 $35,747 $45,556 $55,855 $66,668 $78,023
Income Taxes $1,211 ($242) ($2,259) ($4,377) ($6,601) ($8,937) ($11,389) ($13,964) ($16,667) ($19,506)

CASH FLOW (a/t) $39,334 $45,567 $51,619 $57,973 $64,646 $71,652 $79,008 $86,732 $94,843 $103,358
Cash On Cash Return a/t 3.38% 3.91% 4.43% 4.98% 5.55% 6.15% 6.78% 7.44% 8.14% 8.87%

Footnotes: b/t = before taxes;a/t = after taxes

page 10 of 16
Pride of Ownership Cash Flow Analysis
4882 Cape May Brian Nelson, Broker
San Diego, CA 92107 619-226-6011 x 102

Description Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20

GROSS SCHEDULED INCOME $258,999 $271,895 $285,436 $299,654 $314,582 $330,257 $346,716 $363,998 $382,144 $401,197
Turnover Vacancy ($7,553) ($7,931) ($8,327) ($8,743) ($9,181) ($9,640) ($10,122) ($10,628) ($11,159) ($11,717)
Total Operating Expenses ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160)

NET OPERATING INCOME $199,286 $211,805 $224,949 $238,750 $253,242 $268,458 $284,435 $301,211 $318,825 $337,320
Loan Payment ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500)

NET CASH FLOW (b/t) $134,786 $147,305 $160,449 $174,250 $188,742 $203,958 $219,935 $236,711 $254,325 $272,820
Cash On Cash Return b/t 11.57% 12.64% 13.77% 14.96% 16.20% 17.51% 18.88% 20.32% 21.83% 23.42%

NET OPERATING INCOME $199,286 $211,805 $224,949 $238,750 $253,242 $268,458 $284,435 $301,211 $318,825 $337,320
Depreciation ($44,841) ($44,841) ($44,841) ($44,841) ($44,841) ($44,841) ($44,841) ($44,841) ($44,841) ($42,979)
Loan Interest ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500) ($64,500)

TAXABLE INCOME (LOSS) $89,945 $102,463 $115,608 $129,409 $143,901 $159,117 $175,094 $191,869 $209,484 $229,841
Income Taxes ($22,486) ($25,616) ($28,902) ($32,352) ($35,975) ($39,779) ($43,773) ($47,967) ($52,371) ($57,460)

CASH FLOW (a/t) $112,300 $121,689 $131,547 $141,898 $152,767 $164,179 $176,161 $188,743 $201,954 $215,360
Cash On Cash Return a/t 9.64% 10.45% 11.29% 12.18% 13.11% 14.09% 15.12% 16.20% 17.34% 18.49%

Footnotes: b/t = before taxes;a/t = after taxes

page 11 of 16
Pride of Ownership Unit Mix Report
4882 Cape May Brian Nelson, Broker
San Diego, CA 92107 619-226-6011 x 102

UNIT MIXES

# Units Type Approx. SqFt Avg. Rents Monthly Mkt Rents Monthly
2 Studio 425 $950 $1,900 $950 $1,900
4 1Br/1Ba 525 $1,095 $4,380 $1,095 $4,380
4 2Br/1Ba 725 $1,650 $6,600 $1,650 $6,600
10 5,850 $12,880 $12,880

UNIT MIX UNIT MIX SQUARE FEET

● Studio ● Studio
● 1Br/1Ba ● 1Br/1Ba
● 2Br/1Ba ● 2Br/1Ba

UNIT MIX INCOME UNIT MIX MARKET INCOME

● Studio ● Studio
● 1Br/1Ba ● 1Br/1Ba
● 2Br/1Ba ● 2Br/1Ba

page 12 of 16
Pride of Ownership Detailed General Expenses
4882 Cape May Brian Nelson, Broker
San Diego, CA 92107 619-226-6011 x 102

Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Total Expenses ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160)

Gas & Electric ($840) ($840) ($840) ($840) ($840) ($840) ($840) ($840) ($840) ($840)
Water & Sewer ($5,400) ($5,400) ($5,400) ($5,400) ($5,400) ($5,400) ($5,400) ($5,400) ($5,400) ($5,400)
Landscaping ($3,000) ($3,000) ($3,000) ($3,000) ($3,000) ($3,000) ($3,000) ($3,000) ($3,000) ($3,000)
Trash ($1,920) ($1,920) ($1,920) ($1,920) ($1,920) ($1,920) ($1,920) ($1,920) ($1,920) ($1,920)
Pest ($480) ($480) ($480) ($480) ($480) ($480) ($480) ($480) ($480) ($480)
Maintenance ($5,000) ($5,000) ($5,000) ($5,000) ($5,000) ($5,000) ($5,000) ($5,000) ($5,000) ($5,000)
Misc. ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500)
Insurance ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500)
Taxes ($25,143) ($25,143) ($25,143) ($25,143) ($25,143) ($25,143) ($25,143) ($25,143) ($25,143) ($25,143)
Management Fees ($6,377) ($6,377) ($6,377) ($6,377) ($6,377) ($6,377) ($6,377) ($6,377) ($6,377) ($6,377)

page 13 of 16
Pride of Ownership Detailed General Expenses
4882 Cape May Brian Nelson, Broker
San Diego, CA 92107 619-226-6011 x 102

Description Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20

Total Expenses ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160) ($52,160)

Gas & Electric ($840) ($840) ($840) ($840) ($840) ($840) ($840) ($840) ($840) ($840)
Water & Sewer ($5,400) ($5,400) ($5,400) ($5,400) ($5,400) ($5,400) ($5,400) ($5,400) ($5,400) ($5,400)
Landscaping ($3,000) ($3,000) ($3,000) ($3,000) ($3,000) ($3,000) ($3,000) ($3,000) ($3,000) ($3,000)
Trash ($1,920) ($1,920) ($1,920) ($1,920) ($1,920) ($1,920) ($1,920) ($1,920) ($1,920) ($1,920)
Pest ($480) ($480) ($480) ($480) ($480) ($480) ($480) ($480) ($480) ($480)
Maintenance ($5,000) ($5,000) ($5,000) ($5,000) ($5,000) ($5,000) ($5,000) ($5,000) ($5,000) ($5,000)
Misc. ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500) ($1,500)
Insurance ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500) ($2,500)
Taxes ($25,143) ($25,143) ($25,143) ($25,143) ($25,143) ($25,143) ($25,143) ($25,143) ($25,143) ($25,143)
Management Fees ($6,377) ($6,377) ($6,377) ($6,377) ($6,377) ($6,377) ($6,377) ($6,377) ($6,377) ($6,377)

page 14 of 16
Pride of Ownership Property Equity Analysis
4882 Cape May Brian Nelson, Broker
San Diego, CA 92107 619-226-6011 x 102

$4,900,000

$4,410,000

$3,920,000

$3,430,000

$2,940,000

$2,450,000

$1,960,000

$1,470,000

$980,000

$490,000

Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Legend

Initial Equity Equity (loan reduction) Equity (appreciation)

page 15 of 16
Pride of Ownership Equity vs. Debt
4882 Cape May Brian Nelson, Broker
San Diego, CA 92107 619-226-6011 x 102

$4,900,000

$4,410,000

$3,920,000

$3,430,000

$2,940,000

$2,450,000

$1,960,000

$1,470,000

$980,000

$490,000

Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Legend

Equity Loan Principal Balance

page 16 of 16