Ccpp - Commercial Property

CCPP ASSIGNMENT 6: INVESTMENT ANALYSIS

    1. R1 500 000.00 – Purchase Price
        R1 000 000.00 – Bank Loan
        10 Years Loan period (Monthly loan repayment)
        9% Fixed interest rate(Interest only:R90 000 per annum or R7 500 per month)
      Capital + Interest
      = R150 879.33 per annum or R12 573.28 per month
……………………………………………………………………………………………....

TENANTS

1 - R5 000 per month
2 - R3 500 per month
3 - R6 000 per month
(All fixed for 24 months)

ADD UP
R14 500 per month (Gross income per month before loan repayment)
  (R174 000 per year) (Gross income per annum before loan repayment)

LESS
R2 000 per month (Non recoverable expense)
(R24 000 per year) (Non recoverable expense)
=
R12 500 per month (Nett income per month before loan repayment)
(R150 000 per year) (Nett income per annum before loan repayment)






CASH FLOW FOR THE FIRST 12 MONTHS

R5 000 x 12 = R60 000 (per annum)
R3 500 x   7 = R24 500 (7 months)
R3 000 x   4 = R12 000 (4 months)
R6 000 x 12 = R72 000 (per annum)
ADD UP
        = R168 500 gross per annum
LESS
(NON REFUNDABLE COSTS)
        = R 24 000 annual expense

              =R144 500 NETT PER ANNUM
………………………………………………………………………………………………

CASH FLOW FOR THE 2nd YEAR

R5 000 x 12 = R60 000
R3 000 x 12 = R36 000
R6 000 x 12 = R72 000
ADD UP
        = R168 000 gross per annum
LESS
(NON REFUNDABLE COSTS)
            = R 26 400 annual expense (Assume costs escalate by 10% = R200 per month
      Extra R2 200 x 12)
            = R141 600 NETT FOR YEAR 2



RETURN ON INVESTMENT – YEAR 1

R144 500 (Nett income year 1)
DIVIDED BY
R1 500 000 (Capital Invest)
MULTIPLIED BY
100
= 9.63 INITIAL RETURN IN 1ST YEAR
………………………………………………………………………………………………

RETURN ON INVESTMENT – YEAR 2

R141 600 (Nett income year 2)
DIVIDED BY
R1 500 000 (Capital Invest)
MULTIPLIED BY
100
= 9.44 INITIAL RETURN IN 2ND YEAR
………………………………………………………………………………………………

YIELD...