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Cost
to Own
Property Size: 2,000 square feet
Purchase Price: $305,000.00 ($152.50 psf pre-construction
price)
Interior Finish: $70,000.00 ($35 build-out psf )
Total Investment: $375,000.00
Financing
SBA 1st Mortgage: $337,500.00 (90%)
Cash Investment: $37,500.00
Est. Closing Costs: $5,000.00
Total Cash Required: $42,500.00
Debt Service 6.3% 20-year amortization
Annual Payment: $29,712.00 ($2,476.00 per month)
Taxes, Ins., & CAM: $11,000.00 (Est. $5.50 per month)
Total Annual Cost: $40,712.00
Annual Cost psf: $20.36
Ten Year Analysis:
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
$40,712 |
$40,712 |
$40,712 |
$40,712 |
$40,712 |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
$40,712 |
$40,712 |
$40,712 |
$40,712 |
$40,712 |
Ten Year Total Cost:
$407,120
Cost to Lease
Base Rent: $18.00 psf (annual increases 4%)
CAM: $5.50
Total Rent psf: $23.50
Annual Rent: $47,000
Ten Year Analysis:
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
$47,000 |
$48,440 |
$49,937 |
$51,495 |
$53,114 |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
$54,799 |
$56,551 |
$58,373 |
$60,268 |
$62,239 |
Ten Year Total Cost:
$542,216
Ten Year Total Rent: $542,216
Ten Year Total Own: $407,120
SAVINGS: $135,096 ($13,509 per year)*
*Does not include benefits of ownership
like interest deductions and depreciation
Equity Analysis
Property
Value: |
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
2.5% Appreciation: |
$375,00 |
$384,375 |
$393,984 |
$403,833 |
$413,929 |
1st Mortgage: |
$337,500 |
$329,050 |
$320,068 |
$310,520 |
$300,370 |
Equity: |
$37,500 |
$55,325 |
$73,916 |
$93,313 |
$113,559 |
| Property Value: |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
| 2.5% Appreciation: |
$424,278 |
$434,885 |
$445,757 |
$456,901 |
$468,323 |
| 1st Mortgage: |
$289,581 |
$278,112 |
$265,921 |
$252,962 |
$239,186 |
| Equity: |
$134,697 |
$156,773 |
$179,836 |
$203,939 |
$229,137 |
Summary Analysis:
At the end of ten years you have an appreciating asset that
saves you $135,096 in total annual costs vs, leasing as
well as an equity build up of $229,137 based on a 2.5% appreciation
rate and the mortgage amortization. That totals a benefit
of $364,233 over a ten-year period of owning your office
suite vs. leasing one. This does not include the additional
benefits of interest deductions and depreciation.
Note: No warranty or representation,
expressed or implied, is made as to the accuracy of the
information contained herein and same is submitted subject
to errors, omissions, change in price, rental or other conditions,
withdrawal without notice and subject to any special conditions
imposed by owners.
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