Commercial Real Estate Finance Project

I decided to purchase five properties in the Chicago, Illinois area utilizing the 10,000,000 at 7% annual interest rate assuming full price offer.

The closing costs for commercial properties usually run 2-8% of the purchase price depending on the size and type of commercial property and include appraisal, underwriting fees, lenders' origination fees, application fees, underwriting and document preparation charges, attorney's fees, survey, title insurance, escrows for insurance and taxes, etc. Appraisals are very detailed and can cost up to six thousand dollars because the appraiser must use several different valuation methods to determine the value of a property. Environmental inspections or insurance are often necessary and may cost from several hundred to several thousand dollars as well. For the properties selected the closing costs ran between 2-3.5%

7337 S. South Shore Dr; Chicago, IL 60649 the purchase price is $975,000.

For all the properties listed the closing costs estimate that I received was roughly 2-4% of the purchase price; 7337 S. South Shore Dr is 3.5%. Taxes $1529.83/month; insurance paid by tenants as mandated by association prior to signing lease.

$975,000 * 3.5% = $34125.00 CLOSING COSTS

Monthly Mortgage payment will be (30yr) $8016.53 PIT or $96198.36/year

Monthly Anticipated Gross Rents $18,510.00 or $222,120.00/year

Net Operating Income for the year: $64,619.00

With my monthly annual PIT being $96,198.36; almost $30k higher than my NOI; I'd still purchase this property. After speaking with the agent I found out that the high annual expenses was due to the properties being vacant as of right now. Anticipated expenses would normally include maintenance upkeep and vacancy rate; etc.. Thus the NOI would be considerably higher than PIT at 60% occupancy making this a good buy especially in this high rental area.

Multi Family 5+ List Price: $975,000

Address: 7337 S South Shore Dr , Chicago, Illinois 60649

Total # Units: 27 LAKE FRONT CONDOS

Gross Rental Income: $18,510 Gross Rental Multiplier: 6 Total Annual Exps: 157501

Annual Net Operating Income: $64,619 Total Monthly Income: 18510 Tax Amount: 18,358

Net Oper Income Year: 2010 Total Annual Income: 222120 Tax Year: 2009 Cap Rate: 5

7600 S. Kingston; Chicago, IL 60649 the purchase price is $3,350,000.

For all the properties listed the closing costs estimate that I received was roughly 2-4% of the purchase price; 7600 S. Kingston it is 2%. Taxes $608.33/month; insurance 583.33/month.

$3,350,000 * 2% = $67000.00 CLOSING COSTS

Monthly Mortgage payment will be (30yr) $23,479.29 PITI or $281,751.48/year

Monthly Anticipated gross rents $28,250.00 or $346200.00/year

Net Operating Income for the year: $327,100.96

With my annual PITI being $281,751.48 and NOI $327,100.00; this is a definite buy.

Multi Family 5+ MLS #: 07546342 List Price: $3,350,000

Status: ACTV List Date: 06/04/2010 Orig List Price: $3,350,000

Directions: 7600 S. Kingston; Chicago, IL

Dimensions: 100X125

Remarks: BRAND NEW REHAB. NEW: PLUMBING, ELECTRIC, WINDOWS, INDIVIDUAL HEAT AND MUCH MORE. FEATURES LAUNDRY IN UNITS, CUSTOM CABINETS WITH GRANITE COUNTER TOPS. MINS FROM LAKE SHORE DR. AND METRA. MOST TENANTS HAVE LEASE WITH OPTION TO BUY.

Total # Units: 34

Apartment Info # Units Rooms Bedrooms Baths (F/H) Monthly Income Range (Min-Max)

Type 1 15 5 2 1 950

Type 2 3 5 2 2 1000

Type 3 12 4 1 1 750

Type 4 4 3 1 1 650

Annual Net Operating Income: $326,900

Janitor Expense ($/src): $3,600

Water Expense ($/src): $3,500

Repairs/Decor Expense ($/src): $3,000

Tax Amount: $7,000

Fuel Expense ($/src): $3,600

Scavenger Expense ($/src): $2,400

Other Expense ($/src): $0

Tax Year: 2008

Electricity Expense ($/src): $3,000

Insurance Expense ($/src): $7,000

4612

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