Basic Analysis Reports - Introduction

Basic Analysis for the Real Estate Investment Analysis consists of three pages, which are:

Before Tax Cash Flow Projection This page shows the cash flows associated with the property and the loan package. The purpose of this page is to analyze the attractiveness of the property as an investment without any consideration of the tax implications.

Taxable Income Projection This page shows the details of the net income the investor would report for this investment for tax purposes.

After Tax Cash Flow Projection This page shows the after tax effect of the investment. The purpose of this page is to analyze the attractiveness of the investment after tax. Additionally, this page gives you information which should be of use in tax and net worth planning.

In the Basic Analysis Vertical View, shown in this section, each row of numbers represents a particular year of operations, as labeled along the side of the grid (2001, 2002, etc.), excepting the first and next to last rows, labeled Buy and Sell. These rows show the events associated with the acquisition and sale of the property, whereas the rows labeled as years show the events associated with operating the property for the year shown. The “Total” row represents the arithmetic total of each column, which is interpreted differently depending on the meaning of the column. Where these totals are useful, they are discussed in the following pages.

The vertical reports are very useful for presenting analyses with long holding periods or Monthly Extension reports simply because of the length of paper involved in the horizontal format printout. Additionally, the vertical pages each address a particular subject and therefore conveniently segment a presentation.

As a convention in all our reports, expenses, cash outflows and tax deductions are shown as negative numbers, while revenues and cash inflows are displayed as positive numbers. Thus, the -120,316 shown as Operating Expense for 2002 means that $120,316 was spent as operating expense in that year. Correspondingly, the 204,355 shown as Effective Income in 2002 means that the investor received $204,355 in rental income in that year.