Cabarete Harmony 222 For Sale

William Holden, CCIM

809.571.0072

[email protected]

Cabarete, Dominican Republic

263 m2 / 2,380 sf + Garage

Presented by

Calle Principal, Cabarete

Ocean 1 Real EstatePlaza Ocean One, No. 3318

Second Floor of Four

Elevator Building

4-Bedroom, 3-Bath

Puerto Plata, Dominican Republic

Ocean-Front

Harmony Condominiums - 222

Pelican Beach, Calle Los Pinos

Gross Scheduled Income 60,000$ Purchase/Asking Price 845,000$ Property Type CondoTotal Vacancy and Credits (3,000)$ Improvements - No. of Units 1Operating Expenses (17,683)$ Other - Price Per Unit 851,760$ Annual Reserves: $ Closing Costs 6,760 Total Sqm 263 Net Operating Income (NOI) 39,317$ Finance Points - Price Per Sqm 3,238.63$

Income per Unit 60,000$ MIP Payments $ Total Acquisition Cost 851,760$ Expenses per Unit (17,683)$ Annual Reserves: $ Debt Service: $

Mortgage (s) -$ Cash Flow Before Taxes 39,317$

(4,277) Down Payment / Investment 851,760$

Cash Flow After Taxes 35,040$

% of Asking % of CostRental Growth Rate: 2.00% Down Payment: 851,760$ 100.80% 100.00%Expense Growth Rate: 1.00% Initial Loan Balance: $ 0.00% 0.00%Appreciation Rate 0.00%Marginal Tax Rate: 34.00% Loan Amount Interest Rate Term PaymentCapital Gain Tax Rate: 21.00% $ 0.00% 0 $0

$ 5.00% 0 $0$ 4.00% 0 $0

Year 1 Year 3 Year 7

Debt Coverage Ratio (DCR) - - - Loan-to-Value Ratio (LVR) 0.0% 0.0% 0.0%

Capitalization Rate Based on Cost 4.62% 4.84% 5.33%Capitalization Rate Based on Resale Price 4.36% 4.19% 3.83%

Gross Rent Multiplier 14.08 15.77 17.53

8.00% (30,934) (13,678) 16,620 5.00% (18,096) 9,789 73,087

Cash on Cash Return - Before Taxes 4.62% 4.84% 5.33%Cash on Cash Return - After Taxes 4.11% 4.31% 4.63%

Internal Rate of Return - Before Taxes 7.39% 8.34%Internal Rate of Return - After Taxes 5.42% 6.39%

7.09% 7.46%5.21% 5.75%

Loan InformationAssumptions

Income Taxes: Benefit (Expense) @ 34%

Financial Measurements Projected Cash Flow Before Taxes


Ocean 1 Real Estate

809.571.0072

Property Overview




Income, Expenses & Cash Flow

The information, calculations and data presented in this report are believed to be accurate but are not guaranteed. The information contained in this report shall not be considered as a substitution for legal, accounting or other professional advice. Please seek proper legal and tax advice as appropriate before making investments.

Modified Internal Rate of Return - Before TaxesModified Internal Rate of Return - After Taxes

Net Present Value (NPV) - B/ TaxesNet Present Value (NPV) - A/Taxes

Disclaimer: All information presented is believed to be accurate.

$36,000 $37,000 $38,000 $39,000 $40,000 $41,000 $42,000 $43,000 $44,000 $45,000 $46,000

1 2 3 4 5 6 7


809.571.0072

[email protected]

Property Description

High Ceilings Throughout

Large Living and Dining Areas

Ocean-Front

Granite Counter Tops

Marble Floors Throughout

Harmony Condominiums - 222Pelican Beach, Calle Los PinosCabarete, Dominican Republic

Infinity Pool & Lush Gardens

HIGHLIGHTS


Plaza Ocean One, No. 3318

Ocean 1 Real Estate


Harmony 222 is a beautiful 4-Bedroom, 3-Bath ocean-front apartment with a garage situated on the second floor in Building 2 of Harmony Condominiums. The terrace overlooks lush gardens and an ocean-front infinity pool. This quality residence is front-row center for adventures in kite-boarding, wind-surfing, and small-boat sailing. The private courtyard conveys more of a residential feel as opposed to a rental condominium. Harmony Condominiums are situated in the center of Cabarete Bay which is internationally known as a paradise for windsurfers, kiteboarders and small craft sailors. The bay of Cabarete is a half-moon shape and the Harmony infinity pool, and beach area are front-row center for everything. The ocean view to the left is filled with colorful kite boarders. The view to the right is filled with wind surfers going to and from Bozo Beach. Once outside the gated gardens of this beautiful vacation rental, everything is within short walking distance. The beach of Cabarete Bay is a colorful and has varied scenes of windsurfers, kiteboarders, beach combers, and sun bathers. The village of Cabarete runs along the beach of Cabarete Bay and is lined with restaurants, points of interest, and plentiful shops to visit. Harmony Condominiums are often referred to as one of the most exclusive and prestigious addresses in all of Cabarete. It consists mainly of 4-bedroom condominiums which are ideally suited for families and groups of people who want real luxury. Some of the apartments can be converted to a 2- or 3-bedroom rentals. The unique ocean-front floor plans are spacious with spectacular ocean views. There is a maximum of four (4) stories at Cabarete Bay, and Harmony Condominiums is one of the few resorts where all buildings have elevators.


Enter Description Enter Description





1

Sales Date

Sales Price

Number of Units

Price Per Unit

Sqm 263

Price Per Sqm 3,042$ 4 Bed 3 Bath 1 263 4,500$ 17$

Building Class A

Location Ocean-Front - 3rd Floor

Year Built 2009

2

Sales Date

Sales Price

Number of Units

Price Per Unit

Sqm

Price Per Sqm 3 Bed 3 Bath 1 263 5,000$ 19$

Building Class

Location

Year Built 2009

December 31, 2011

799,000$

263

3,038$

A

1

Center of Cabarete Bay


April 30, 2012

William Holden, CCIM809.571.0072

Ocean-Front - 3rd Floor

799,000$



Harmony Condominiums


$800,000

1

800,000$ No. of Units

Sqm Per Unit

Unit Type No. of Units

Unit Type

Sqm Per Unit

Rent Rent Sqm

Rent Rent Sqm

Owner desired to downsize and another client holding 2-bedroom valued at $300,000 desired to upgrade. So, we put a deal together whereby the 2-bedroom owner transferred title and gave $500,000 in cash to purchase the Harmony unit.

Long-time client rented various condominiums over the years and finally decided to buy this beautifully furnished ocean-front condominium. It was an all-cash deal.





3

Sales Date

Sales Price

Number of Units

Price Per Unit

Sqm


Building Class A

Location

Year Built

Ocean-Front 1st Floor

2009

1

$750,000

June 8, 2012

750,000$

263

2,852$



Sqm Per Unit RentUnit Type No. of

Units Rent Sqm


1

Listing Date

List Price

Number of Units 1

Price Per Unit

Sqm 370

Price Per Sqm 3,581$ 31 Bed 3 Bath 1 370 7,000$ 19$

Building Class A

Location Ocean-Front 4th Floor

Year Built 2010

2

Listing Date

List Price

Number of Units

Price Per Unit

Sqm


Building Class

Location

Year Built



Millennium Resort

Ocean One Condominiums

$1,325,000


December 31, 2011

362


August 1, 2012

1,295,000$

1

$1,325,000

2009

1,295,000$

Ocean-Front 4th Floor

3,577$

A


Unit Type No. of Units Rent Rent Sqm

Rent Rent Sqm

Sqm Per Unit

No. of Units

Sqm Per UnitUnit Type

Millennium Resort is run more like a hotel and is predominantly short-term rental. Harmony Condominiums, on the other hand, is more residential in nature but is still offered as a vacation rental resort.

The price of this sale comparable was reduced $400,000 from the original price of $1,695,000.





3

Listing Date

List Price

Number of Units

Price Per Unit

Sqm


Building Class A

Location

Year Built


$925,000

1

6/31/2012


Unit Type No. of Units

3,517$

Ocean-Front 1st Floor

2009

925,000$

263

Rent SqmSqm Per Unit Rent

This owner combines personal use with short-term rental availablity. Seller reduced the price from $975,000 but is not motivated to accept less than the current asking price.

© 1993 - 2011 Cash Flow Analyzer® RentalSoftware.com


Pelican Beach, Calle Los PinosCabarete, Dominican Republic

Year 1 Sqm Year 2 Sqm Year 3 Sqm Year 4 Sqm Year 5 Sqm

Potential Rental Income 60,000$ 228.14 61,200$ 232.70 62,424$ 237.35 63,672$ 242.10 64,946$ 246.94Less: Vacancy & Credit Losses (3,000) -11.41 (3,060) -11.63 (3,121) -11.87 (3,184) -12.11 (3,247) -12.35

57,000$ 216.73 58,140$ 221.06 59,303$ 225.49 60,489$ 230.00 61,699$ 234.60

57,000$ 216.73 58,140$ 221.06 59,303$ 225.49 60,489$ 230.00 61,699$ 234.60

Accounting 150 0.57 152 0.58 153 0.58 155 0.59 156 0.59Association Fees 6,348 24.14 6,411 24.38 6,476 24.62 6,540 24.87 6,606 25.12Commissions 4,560 17.34 4,606 17.51 4,652 17.69 4,698 17.86 4,745 18.04Insurance 1,300 4.94 1,313 4.99 1,326 5.04 1,339 5.09 1,353 5.14Repairs 600 2.28 606 2.30 612 2.33 618 2.35 624 2.37Property Taxes 825 3.14 833 3.17 842 3.20 850 3.23 858 3.26Electricity 3,000 11.41 3,030 11.52 3,060 11.64 3,091 11.75 3,122 11.87Telephone / Internet 720 2.74 727 2.77 734 2.79 742 2.82 749 2.85Cable TV 180 0.68 182 0.69 184 0.70 185 0.71 187 0.71

17,683$ 67.24 17,860$ 67.91 18,038$ 68.59 18,219$ 69.27 18,401$ 69.97

39,317$ 149.49 40,280$ 153.16 41,264$ 156.90 42,270$ 160.72 43,298$ 164.63

Cash Flow Before Taxes 39,317$ 149.49 40,280$ 153.16 41,264$ 156.90 42,270$ 160.72 43,298$ 164.63

Net Operating Income (NOI)

Total Operating Expenses

Operating Expenses

Effective Rental Income

809.571.0072

Gross Operating Income


9/5/12 5:10 PM © 1993 - 2011 Cash Flow Analyzer® RentalSoftware.com


Pelican Beach, Calle Los PinosCabarete, Dominican Republic

Potential Rental Income 60,000$ 61,200$ 62,424$ 63,672$ 64,946$ Less: Vacancy & Credit Losses (3,000) (3,060) (3,121) (3,184) (3,247) Less: Operating Expenses (17,683) (17,860) (18,038) (18,219) (18,401)

Net Operating Income (NOI) 39,317$ 40,280$ 41,264$ 42,270$ 43,298$

Less: Annual Debt Service - - - - -

CASH FLOW Before Taxes 39,317$ 40,280$ 41,264$ 42,270$ 43,298$

Income Taxes: Benefit (Expense) @ 34% (4,277) (4,209) (4,544) (4,886) (5,235)

CASH FLOW After Taxes 35,040$ 36,071$ 36,721$ 37,384$ 38,063$

Projected Sales Price 901,250$ 937,300$ 984,165$ 1,043,215$ 1,105,808$ Less: Selling Expenses (54,075) (56,238) (59,050) (62,593) (66,348)

Adjusted Projected Sales Price 847,175$ 881,062$ 925,115$ 980,622$ 1,039,459$

Less: Mortgage(s) Balance Payoff - - - - -

SALE PROCEEDS Before Taxes 847,175$ 881,062$ 925,115$ 980,622$ 1,039,459$

(6,867) (23,091) (40,992) (61,297) (82,302)

SALE PROCEEDS After Taxes 840,308$ 857,971$ 884,124$ 919,325$ 957,157$

Cash Generated in Current Year 35,040$ 36,071$ 36,721$ 37,384$ 38,063$ Cash Generated in Previous Years n/a 35,040 71,111 107,832 145,216 Cash Generated from Property Sale 840,308 857,971 884,124 919,325 957,157 Original Initial Investment (851,760) (851,760) (851,760) (851,760) (851,760)

23,588$ 77,322$ 140,195$ 212,781$ 288,676$

Capitalization Rate Based on Cost 4.62% 4.73% 4.84% 4.96% 5.08%Capitalization Rate Based on Resale Price 4.36% 4.30% 4.19% 4.05% 3.92%

Net Present Value (NPV) - Before Taxes 8.00% (30,934) (25,453) (13,678) 3,792 19,911 Net Present Value (NPV) - After Taxes 5.00% (18,096) (7,466) 9,789 33,137 56,587

Cash-on-Cash Return with Equity 2.77% 6.39% 7.33% 8.21% 8.26%Cash-on-Cash Return - Before Taxes 4.62% 4.73% 4.84% 4.96% 5.08%Cash-on-Cash Return - After Taxes 4.11% 4.23% 4.31% 4.39% 4.47%

Internal Rate-of-Return (IRR) - Before Taxes 4.08% 6.34% 7.39% 8.13% 8.54%Internal Rate-of-Return (IRR) - After Taxes 2.77% 4.53% 5.42% 6.07% 6.47%

Modified Internal Rate-of-Return (MIRR) - Before Taxes 4.08% 6.20% 7.09% 7.65% 7.90%Modified Internal Rate-of-Return (MIRR) - After Taxes 2.77% 4.44% 5.21% 5.73% 6.01%

Financial Measurements

Year 4 Year 5

Cash Position

Rental Activity Analysis

Total Potential CASH Generated

Property Resale Analysis

Year 1 Year 2 Year 3

Income Taxes: ReSale: Benefit (Expense) @ 21%


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Notes and Discussion

Ocean 1 Real Estate


Harmony Condominiums - 222Pelican Beach, Calle Los Pinos


809.571.0072 Calle Principal, CabaretePlaza Ocean One, No. 3318


FINANCIAL DATA - The financial data enclosed with this report may not be important for the all-cash buyer with no desire for rental income. However, this analysis establishes a reasonable price entry-point and a basis for an exit strategy. In other words, this financial data may be important to investor-types who are interested in financial data during the re-sale process. SALE PRICE - The current asking price has been established by an analysis of the following methods, all of which are inter-related: - Cost Approach - building costs in the multi-family category are determined by developers, and at present, building costs are in the $2,000 to $2,500/m2 range depending on location. Additional costs for furnishings, accessories, and appliances are in the $275 to $300 / m2 range. Although there are new-construction properties coming available, the locations will not be as prime as Harmony Condominiums in the center of Cabarete Bay. - Income Approach - the income approach can be a moving target based seasonal adjustments and world-wide economic conditions. However, the financial data presented are reasonable expectations of what could be achieved, without making any guarantees. - Market Data Approach - the sales comparables used represent both recent sales and current listings for sale. The north coast of the Dominican Republic is unique in that there is little mortgage financing available. Thus, most acquisitions are made in cash. This is a negative on the one hand, because the re-sale market is smaller due to the all-cash requirements. However, on the flip side, all-cash purchases mean there are no panic sales to satisfy mortgage payments or pay property taxes. Thus, the market is more stable as owners have more holding power than owners who are heavily financed. CONCLUSION - The sale price of $845,000 was established to set up a reasonable Capitalization Rate and Internal Rate of Return (IRR) based on other market alternatives. This rate of return is determined by two separate cash flows. First, the cash flows from rental income. Second, the cash flow from net proceeds of sale. Therefore, to accomplish the desired rate of return, the current asking price was lowered to allow room for "upside" upon resale. These projected cash flows from net rental income and net proceeds of sale are included in other sections of this report.

809.571.0072


About Us

Ocean 1 Real EstatePlaza Ocean One, No. 3318Calle Principal, CabaretePuerto Plata, Dominican Republic

[email protected]

William was an airline captain for 37 years. He started with Trans World Airlines (TWA) and spent the last few years of his career as a captain for American Airlines. During those years as a pilot, he was also a real estate developer in Vail, Colorado, USA from 1972 to 1986. During that time, he developed multi-family condominiums and townhomes in a ski resort and golf course setting. In addition, he acted as general contractor, architect, marketing director, sales manager and property manager for all properties he developed. From 1986 to 2001, Mr. Holden was a real estate appraiser in St. Louis, Missouri, USA. He primarily did appraisals and investment analysis on shopping centers, office buildings, industrial office warehouses, and residential apartment properties. From 2001 to 2005, Mr. Holden had an asset management company and provided mortgage financing and investment advising as a registered investment adviser with a Series 7 securities license. He also specialized in allocating IRA/401k retirement funds to investment real estate. From 2005 to present, Mr. Holden has made numerous investments in multi-family residential real estate on the north coast of the Dominican Republic. In addition to managing his own properties, he set up a full-service real estate company in Cabarete that includes property management, rental management, sales, and guest services. The guest services department assists rental guests in activities and local excursions. He has also established online reservations system to enhance rentals on the world wide web. Cell Phone = (829) 962-6644.


809.571.0072

[email protected]

Terms & Definitions



Ocean 1 Real EstatePlaza Ocean One, No. 3318

Net Operating Income (NOI) is a property’s gross rental income reduced by all expenses except for loan payments, income taxes, mortgage insurance premium (MIP) payments and sometimes funded reserves. Debt Coverage Ratio (DCR) is a property’s net operating income divided by the amount of debt payments. Lenders use this calculation to determine the remaining operating cash flow after the debt payments. Loan-to-Value Ratio (LTV) is the outstanding debt divided by the value of the property. This ratio is used to determine the amount of leverage and property equity. The debt balance can be the beginning or end-of-year balance. The property value used can be the contract price or the fair market value at the end of the year. Capitalization Rate (Cap Rate) is the net operating income (NOI) divided by either the property’s contract purchase price or its fair market value. Cash-on-Cash Return is the net cash flow divided it by the initial investment (down payment). The calculation does not take into account the time value of money or change in the property’s equity. Cash-on-Cash Return with Equity Build-up modifies the cash-on-cash return calculation by adding the property’s net change in equity for that year to the numerator and adding all previously generated equity to the denominator of the cash-on-cash return ratio. The calculation calculates the return on the property equity, i.e. the return on the cash that is “tied up” in the property. Net Present Value (NPV) converts future dollars into present-day dollars by discounting (reducing) the future cash flow of a property by a given rate or percentage. The initial investment (down payment) is subtracted from the discounted dollars to derive the NPV. A positive NPV means that the property will generate a higher return than the given rate or percentage used to calculate the NPV amount. Gross Rent Multiplier (GRM) is a property’s fair market value divided by its gross rental income. Mortgage Insurance Premium (MIP) Payments are insurance premiums charged by a lender to protect that lender against loss from a mortgager's default. The rates are charged on the balance of the loan and may be paid annually, monthly, or in some combination of the two (split premiums). Internal Rate-of-Return (IRR) is the most widely used method of valuing a property’s annual cash flow stream. Since a property’s cash flow is earned in the future, those future dollars must be converted to present-day dollars. The IRR calculation discounts (reduces) the property’s future cash flow at a rate (i.e. percentage) so that the sum of all cash flow for a specified time period is equal to the initial investment. The rate or percentage needed to do that is the IRR. In other words, IRR is the discount rate at which Net Present Value (NPV) is zero. Modified Internal Rate-of-Return (MIRR) modifies the IRR to avoid the drawbacks of the traditional IRR. The IRR implicitly assumes that all cash flow is either reinvested or discounted at the computed IRR rate. In reality, a property’s cash flow probably will not be reinvested at the computed IRR rate, but rather earn zero or a small amount of interest. The MIRR eliminates the reinvestment assumption by utilizing user stipulated reinvestment and borrowing rates.

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Cabarete Harmony 222 For Sale

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