Epic Associates 84-III, William C. Griffith, Jr. - Page 101




                                       - 28 -                                         
             Contribution)."  In this opinion, we refer to this payment               
             as the rental deficit contribution.  Finally, the rental                 
             purchase agreement provides, as a condition to the                       
             purchaser's obligation to purchase the properties, that the              
             "purchaser shall have obtained an appraisal of each of the               
             Properties by a FNMA/FHLMC qualified appraiser * * * which               
             shall reflect the value of each Property equal to or                     
             greater than the purchase price applicable to that                       
             property".                                                               
                  EPIC made the following internal cash-flow analysis                 
             of the transaction with Babcock:                                         

             Paseos Castellanos Year 1  Year 2   Year 3  Year 4    Total              
             Builder lease payments-0-     -0-      -0-     -0-      -0-                  
             Tax, ins., HOA reimburse-0-     -0-      -0-     -0-      -0-                  
             Tenant rental     $243,873$246,792 $266,536$287,858 $1,045,059           
             Rental deficit contribution  659,929-0-      -0-     -0-      659,929              
             Interest income    62,531 37,533   12,514  -0-      112,578              
                                                                                     
             Total revenue     966,333 284,325  279,050 287,858  1,817,566            
             First trust interest-424,784-424,784 -424,784-424,784 -1,699,136           
             Tax, ins., HOA expense-71,196 -71,196  -71,196 -71,196  -284,784             
             Repairs & maintenance-15,173 -15,173  -15,173 -15,173  -60,692              
             Property management fee-16,380 -16,380  -16,380 -16,380  -65,520              
             Audit fee         -3,793  -3,793   -3,793  -3,793   -15,172              
             Interest on EPIC advances   -39,259-39,259  -39,259 -39,259  -157,036             
             Total expenses    -570,585-570,585 -570,585-570,585 -2,282,340           
             Anticipated cash deficit395,748 -286,260 -291,535-282,727 -464,774             
             As a percent of purchase13.04   -9.43    -9.61   -9.32    -15.32               
             price                                                                    

             As shown above, EPIC projected a cash deficit from the                   
             transaction at the end of the fourth year of $464,774,                   
             or 15.32 percent of the purchase price (viz $3,034,550).                 
             EPIC further projected that the following appreciation                   






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