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1. You have available financing at 75% of purchase price at a 5.0% annual rate, 25-year amortisation.
2. Assume an exit (sale at the end of year 10) capitalization rate of 9.5%. Don’t forget you will need to pay off the remaining loan balance and pay a 6.0% broker’s commission on the sales transaction.
3. Keep it simple. Review the income and expense date and consolidate categories. Use annual numbers, not monthly numbers. But don’t forget that rental income, expenses and interest on your debt occur on a month by month basis.
4. Develop a READABLE Excel spreadsheet of annual
income and expense over a 10 year period. Purchase date (year 0) is 12/31/14. Sale date at the end of year 10 is 12/31/24. Show the initial investment,
NOI, and Cash Flow after debt service. Footnote your assumptions
on lease renewals, re-leasing, vacancy allowances, capital expenditures, increases in rents and expenses, selling price and ex-ante cap rate. Your XIRR (on invested equity) hurdle rate is 15%.
Does this investment meet your hurdle rate? If so, by how much? If not, by how much?
List three things you could do to improve the return.
What are you willing to offer the seller for this property?
You won $1.0 million in the lottery. After taxes, paying off your bills and student loans and buying a new car you have $500,000 remaining. You want to set-up a stock portfolio that you can work and build over your lifetime.
Choose 10 stocks to start your portfolio. Make sure you diversify by industry and beta. Write-up a short explanation of why you chose these individual companies and the logic or your overall portfolio. Remember, you will be constantly reviewing and modifying your portfolio over time.
Set-up an Excel Spreadsheet that will serve as your analytical summary of tracking your stock portfolio going forward. Include the following categories in your spreadsheet, even if there are empty columns to be filled in as time passes.
a) Stock Name & Industry
b) Stock Beta by company
c) Stock Price by company
d) Number of Shares of each company
e) Total Value of Shares owned in each company
f) Weighted Average of each company to total portfolio
g) Weighted Average Beta of Portfolio
h) Dividends Paid to Date by company
i) Total Return to Date (dividends & gain(loss)) by company
j) Total Portfolio Annual Return