- 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 appreciationPage: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 Next
Last modified: May 25, 2011