LOVELY ASSET MANAGEMENT

Lovely Asset Management

Lovely Asset Management

Overview of the property

The property that has been chosen for the rental purpose is Illinois Avenue. It was constructed in 1974 with 128 apartments NRSF of 81,291that connect to 635 square feet which is an average size of units. Furthermore, this property has five stories with seven different floors that ranges from 510 to 989 sq ft.

This property which comprises of 128 units has been divided as followed:

104 one bedroom with one bath 50% are for D portion and 50% are C/E portion

24 two bed room with one bathe (1+1) this is B portion

Among them, 14 apartment homes has been upgraded while 54 apartment homes with improvement such as new cabinets in kitchen or bath, whereas, 60 remaining apartment homes are usual form.

Features of Property

The features of these apartments are

Private balconies

Provide resident ad on-site amenities i.e.

Outdoor pool with sundeck

Courtyard recreation area

Facilities of covered parking and laundry

Location of the property

Illinois Avenue is located at the west of Chicago which is forty miles away, it should be noted that Aurora is the 2nd largest city in the Illinois state which comprises of population of 197,899 residents in 2010. In 2011 the average house-hold income was $59,631 and $178,843 an average value of the house.

Current Rent of Apartments

Currently the rate of these apartment ranges from for:

Floor Plans

Name

Beds

Baths

Price

D

1

1

$640-$725

C/E

1

1

$640-$725

B

2

1

$850-$925

But usually, the rent which is received from the tenants are as followed:

$640 for 1 bed and bath at D floor; a total of $33,280 for 52 units per month

$700 for 1 bed and bath at C/E floor; a total of $36,400 for 52 units per month

$899 fro 2 beds and baths i.e. B potion; a total of $21,576 for 24 units per month

Current Annual Operating Data:

 

 

Percentage of Gross Income

 

Gross Income

$1,095,072

 

Total rent for the years is $1,095,072

Vacancy Rate Reserve

$32,852

3%

 

Gross Operating Income

$1,062,220

 

Expenses:

($280,286)

37.20%

Taxes (rate: 1.189%)

$126,298

 

Insurance

$13.89

 

Utilities

$21,264

 

Maintenance

$32,852

3%

Gardening

$2,500

 

On-site Manager

$32,852

3%

Off-site Manager

$43,803

4%

Reserves

$10,951

1%

Trash

$4,092

 

SCEP & RSO fees

$2,160

 

Pest Control

$3,500

 

Net Op Income

$781,934

71%

To see whether this investment project is feasible for LAM or not, the following assumption will be consider that will assist in the return from the project and acceptable of the investment opportunity and how much it will be profitable.

Assumptions

Rental income:

On three different types of apartment, the rental income will increase by 3% per year. The expected income from apartment would be as followed:

Name

2010

2011

2012

2013

2014

2015

2016

2017

D

$640-$725

$659-$747

$679-769

$699-792

$720-816

$742-840

$761-866

$787-892

C/E

$640-$725

$659-$747

$544-884

$699-792

$720-816

$742-840

$589-957

$601-976

B

$850-$925

$876-953

$902-981

$929-1011

$957-1041

$985-1072

$1015-1104

$1045-1138

2010

Monthly Rent

Unit rent

 

$640 for 52 units

$33,280

$399,360

$700 for 52 units

$36,400

$436,800

$899 for 24 units

$21,576

$258,912

 

 

$1,095,072

Projected Gross Income:

As the rent as been calculated, the projected income would be as followed:

 

2010

2011

2012

2013

2014

2015

2016

2017

Gross Income:

$1,095,072

$1,127,924

$1,161,762

$1,196,615

$1,232,513

$1,269,489

$1,307,573

$1,346,800

Rent

$1,095,072

$1,127,924

$1,161,762

$1,196,615

$1,232,513

$1,269,489

$1,307,573

$1,346,800

Vacancy Rate

During 2011, it was perceived that vacancies loss would 3% from the total rent of the apartments. This rent would be constant for 7 years. Hence, the occupancy rate would 97% with Lot Size: 3.60 ...