etermine your terminal value using a going-out cap rate, then estimate your net sale proceeds. See Real Estate Principles: A Value Approach, Exhitbit 19-3.

(Example of how paragraph should look)

Levered versus Unlevered Cash Flows

To this point, we have estimated annual operating cash flows net of vacancy and collection losses, operating expenses, and capital expenditures. But are the pro forma NOIs, if realized, the actual amounts the owner of Centre Point will have available each year to spend, save, or invest elsewhere? The answer is no. Why? Because in many cases, property owners use a combination of equity and mortgage debt to finance an acquisition such as Centre Point. Therefore, the investor’s cash flows from operations will be reduced by any payments that are required to stay current on (i.e., “service”) the mortgage. The use of mortgage debt to help finance capital investment is commonly referred to as leverage. Thus, the expected annual stream of NOIs and the expected NSP areunlevered cash flows because they represent the income-producing ability of the property before subtracting the portion of the annual cash flows that must be paid to the lender to service or retire the debt. Levered cash flows measure the property’s income after subtracting any payments due the lender.2

(Information for Question)

Introduction

Knowing net operating income (or NOI) is important when looking into investing in commercial real estate.  Not having knowledge of the process makes it improbable to totally understand the transactions of real estate investments (Schmidt, 2014).  NOI is compiled of an income based property, deducting expenses stemming from operations and adding any income collected from the operation of the company (Schmidt, 2014).   NOI calculated the ability of a real estate property to make income from the operations of the commercial property.  If you are calculating by formula, it may come out to look something like:

 (Schmidt, 2014).

Assumptions Associated with NOI

Our real estate property that we chose in week two is in an excellent location, with perfect square footage for the new restaurant. The size of the loan is sufficient for running the business with initial costs for the property. Based on the size of the loan, and the projected demand for the restaurant, we expect that the net operating income will be below for the first several years, expecting to see an increase in the net operating income each year. We would also assume that the more the loan for the property is paid off, the faster our net operating income should increase.

Executive Summary

727 Inc

727 Inc is a Buffalo Gastropub specializing in craft beer and new age pub food.

Food and Beer

We offer 50 craft beers on tap. 10 of them from local western New York breweries. Our food menu specializes in fresh game burgers. Such as Elk, Venison, Ostrich, Duck and Buffalo Meat. We also have the best Mac and cheese in western New York. The award winning recipe can be used to Mac any kind of Mac and cheese that you can think of. From Jalapeno Cheddar Mac to Lobster to Soft Pretzel Mac. All of which pair nicely with our craft brew on tap.

30 something financially mobile people

We cater to the upwardly mobile 30 something crowd that has a small disposable income and the taste to spend it wisely.

600,000 Financial Highlights

As you can see from the graph below our first year at 727 Inc has been a great success. Our revenue has climbed to almost 800,000 dollars. B keeping our costs down and using our vendors frugally we have managed to net over 600,000.

Financial PlanRevenue ForecastRevenue Forecast

2016

2017

2018

2019

2020

Revenue

Test

$761,700

Credit Card Sales

$3,840,000

$3,840,000

$3,840,000

$3,840,000

$3,840,000

Total Revenue

$4,601,700

$3,840,000

$3,840,000

$3,840,000

$3,840,000

Direct Cost

Gas Bill

$6,000

$6,000

$6,000

$6,000

$6,000

Mortgage

$102,336

$102,336

$102,336

$102,336

$102,336

Direct Labor

Total Direct Cost

$108,336

$108,336

$108,336

$108,336

$108,336

Gross Margin

$4,493,364

$3,731,664

$3,731,664

$3,731,664

$3,731,664

Gross Margin %

98%

97%

97%

97%

97%

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