Real Estate Investment

1
Real Estate Investment FEASIBILITY
ANALYSIS 2302 S. G. St. Tacoma, WA 98405
Presentation By Claudia Davila, Joe
Attinello, Yong Kim
2
Demographics

• 2006 Population in Tacoma 198,491
• Population of age of 55
  42,080
• 2011 Population in Tacoma 206,644
• Population of age of 55
  47,941
• 2006-2011 Annual population growth rate
  0.81
• 2006-2011 Overall population growth rate
  4.10
• 2006-2011 Overall population growth rate for 55
  13.90
• 
  
• Retrieved from the report New Home Trend
  Analysis from City of Tacoma Website

3
Demographics (contd)

• The growth plan of UW Tacoma 2004-2014
• - Adding approximately 3,000 upper
  division FTEs and 400 graduate FTEs while
  maintaining 1.26 of the ratio of students to
  FTEs
• This is translated into expected growth of
  almost 4,300 additional students in UW Tacoma
  over next 7 years.
• Retrieved from the report Report on the future
  of the University of Washington Tacoma
• http//www.tacoma.washington.edu/uwtfuture/2707_St
  udy_Report_Olswang.pdf

4
Location

• Location Map

5
Floor Plan
6
Initial Costs
7
Financing
8
Revenue
9
Operating Expenses
10
Gain on DisposalYear 8
11
Cash Flow from Operations
12
Sensitivity Analysis

• Scenario 1
• Changes in Appreciation Rate
• Scenario 2
• Changes in Rent/Sq. Ft.
• Scenario 3
• Changes in Construction Cost/ Sq. Ft.

13
Appreciation Rate

• U.S. Census Bureau
• Average home value
• Washington 3.26 appreciation rate per year from
  (1940-2000)
• MSN Money
• Tacoma, WA appreciated 20 in 2005
• 65 over the past 5 years (or 13 per year)
• Economagic
• Average appreciation rate of houses actually sold
  in the U.S. 6.5
• West Coast 7

14
Appreciation Rate (contd)
Construction Cost/Sq. Ft. 110 Rent Charge/Sq.
Ft. 1.20
Discount Rate 12
15
Rent Comparables
16
Rent Charge/Sq. Ft. (contd)

• Appreciation Rate 5
• Construction Cost/Sq. Ft. 110

17
Construction Cost/Sq. Ft.
Appreciation Rate 5 Rent Charge/Sq. Ft.
1.20

• Based on Paradigm Construction LLC rates

Low-End
Middle-End
High-End
18
Investment Decision

• Location, Location, Location! YES
• Projected (8-year average)
• NOI 118,786.14
• After-Tax Cash Flow 23,149.39
• Sale on year 8
• After-Tax Cash Flow 750,380.94