WOW Cabarete For Sale

William Holden, CCIM

809.571.0072

[email protected]

Central Location

WOW Cabarete

Pelican Beach, Calle PrincipalCabarete, Dominican Republic

Studio / 1 Bath

Presented by

Calle Principal, Cabarete

Ocean 1 Real EstatePlaza Ocean One, No. 3318

55 m2 / 538 sf

Roof-top Solarium

Seconds to the Beach

Puerto Plata, Dominican Republic


809.571.0072

[email protected]


Plaza Ocean One, No. 3318

Ocean 1 Real Estate


Property Description

Quality Construction

Excellent Rentability

Central Location

Buyer's Group Pricing

Market Demand Floor Plan

WOW CabaretePelican Beach, Calle PrincipalCabarete, Dominican Republic

Seconds to the Beach

HIGHLIGHTS

WOW Cabarete is a new boutique and condominium project scheduled for construction next year. This new project is located in Cabarete on the north coast of the Dominican Republic and is situated between the well-known Ocean Dream Condominiums to the west and Ocean One Condominiums to the east. WOW Cabarete will host the city's first enclosed retail mall and residential community. The walk to the beach in the center of Cabarete Bay is measured in seconds. The beach of Cabarete Bay is a colorful and varied scene of windsurfers, kiteboarders, beach combers, and sun bathers. The village of Cabarete, which runs along the beach of Cabarete Bay, is lined with restaurants, points of interest, and plentiful shops to visit. RESIDENTIAL SPACE - Wow’s residential community will be home to 25 condominiums which will include studios, one and two bedroom units and will range in size from 55 sqm to 179 sqm The upper level homes will be accessible by stairs and/or elevator. Each condo will have a private terrace and be festooned in designer style with the following special features: - Imported Ceramic Tile - Natural Granite Counter-Tops - Brazilian Oak Hardwood Cabinetry - Double-Glazed Aluminum Frame Windows - Teka Stove and Accessories. Of importance to many investors is that each boutique and residential unit will be indivually metered for electricity usage. This means that you pay only for what electricity you actually use, rather than paying a pro-rata share of what everyone else is using -- whether or not you use any electricity at all.

Enter Description Enter Description

WOW Cabarete




Pelican Beach, Calle Principal

1

Sales Date

Sales Price

Number of Units

Price Per Unit

Sqm 50

Price Per Sqm 1,900$ Studio 1 50 900$ 18$

Building Class A

Location 3rd Floor

Year Built 2006

2

Sales Date

Sales Price

Number of Units

Price Per Unit

Sqm

Price Per Sqm Studio 1 50 900$ 18$

Building Class

Location

Year Built

Rent Sqm

Rent Rent Sqm

Center of Cabarete Bay


February 28, 2008

William Holden, CCIM809.571.0072

2nd Floor

89,500$

WOW Cabarete

Cabarete, Dominican Republic

Ocean Dream Condominiums


$95,000

1

95,000$ No. of Units

Sqm Per Unit

Unit Type No. of Units

Unit Type

Sqm Per Unit

Rent

2006

April 1, 2008

89,500$

50

1,790$

A

1

The sales market began slowing in 2008 and the market has been flat. Moreover, not many studio apartments have come on the market for sale since then because of good rental income activity.

Studios for sale has been flat due to good rental activity. In addition, most studio apartments were purchased on an all-cash basis. Therefore, with no mortgage payments and positive cash-flows, rates of return are very competitive.


1

Listing Date

List Price

Number of Units 1

Price Per Unit

Sqm 51

Price Per Sqm 2,157$ Studio 1 51 900$ 18$

Building Class A

Location Cabarete

Year Built 2006

2

Listing Date

List Price

Number of Units

Price Per Unit

Sqm

Price Per Sqm 1 Bed 1 Bath 1 63 1,200$ 19$

Building Class

Location

Year Built


Unit Type No. of Units Rent Rent Sqm

Rent Rent Sqm

Sqm Per Unit

No. of Units

Sqm Per UnitUnit Type

2009

160,000$

4th Floor

2,540$

A

WOW Cabarete



Ocean One Condominiums

$110,000


December 31, 2011

63


January 1, 2012

160,000$

1

$110,000

This is one of the few studio apartments available for sale. The comp below shows a 1-bedroom alternative.

This condominium is adjacent to the proposed WOW Cabarete development. It is included in the comps because of the low number of studio apartments available for sale in Cabarete.

Gross Scheduled Income 10,800$ Purchase/Asking Price 75,000$ Property Type CondoTotal Vacancy and Credits (540)$ Improvements 10,000 No. of Units 1Operating Expenses (5,270)$ Other - Price Per Unit 85,750$ Annual Reserves: $ Closing Costs 750 Total Sqm 55 Net Operating Income (NOI) 4,990$ Finance Points - Price Per Sqm 1,559.09$

Income per Unit 10,800$ MIP Payments $ Total Acquisition Cost 85,750$ Expenses per Unit (5,270)$ Annual Reserves: $ Debt Service: $

Mortgage (s) -$ Cash Flow Before Taxes 4,990$

(769) Down Payment / Investment 85,750$

Cash Flow After Taxes 4,221$

% of Asking % of CostRental Growth Rate: 2.00% Down Payment: 85,750$ 114.33% 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 5.82% 6.18% 6.95%Capitalization Rate Based on Resale Price 5.10% 4.96% 4.63%

Gross Rent Multiplier 6.94 9.51 10.57

5.00% 6,601 15,009 31,610 5.00% 3,818 7,928 16,872

Cash on Cash Return - Before Taxes 5.82% 6.18% 6.95%Cash on Cash Return - After Taxes 4.92% 5.21% 5.72%

Internal Rate of Return - Before Taxes 11.11% 10.55%Internal Rate of Return - After Taxes 8.29% 8.11%

10.56% 9.24%7.92% 7.18%

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.


Ocean 1 Real Estate

809.571.0072

Property Overview

WOW Cabarete



Income, Expenses & Cash Flow

Loan InformationAssumptions

Income Taxes: Benefit (Expense) @ 34%

Financial Measurements Projected Cash Flow Before Taxes

$4,400

$4,600

$4,800

$5,000

$5,200

$5,400

$5,600

$5,800

$6,000

1 2 3 4 5 6 7

© 1993 - 2011 Cash Flow Analyzer® RentalSoftware.com

WOW Cabarete


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

Potential Rental Income 10,800$ 196.36 11,016$ 200.29 11,236$ 204.30 11,461$ 208.38 11,690$ 212.55Less: Vacancy & Credit Losses (540) -9.82 (551) -10.01 (562) -10.21 (573) -10.42 (585) -10.63

10,260$ 186.55 10,465$ 190.28 10,675$ 194.08 10,888$ 197.96 11,106$ 201.92

10,260$ 186.55 10,465$ 190.28 10,675$ 194.08 10,888$ 197.96 11,106$ 201.92

Accounting 150 2.73 152 2.75 153 2.78 155 2.81 156 2.84Association Fees 1,500 27.27 1,515 27.55 1,530 27.82 1,545 28.10 1,561 28.38Commissions 1,080 19.64 1,091 19.83 1,102 20.03 1,113 20.23 1,124 20.43Insurance 270 4.91 273 4.96 275 5.01 278 5.06 281 5.11Repairs 120 2.18 121 2.20 122 2.23 124 2.25 125 2.27Property Taxes 170 3.09 172 3.12 173 3.15 175 3.18 177 3.22Electricity 1,200 21.82 1,212 22.04 1,224 22.26 1,236 22.48 1,249 22.70Telephone / Internet 600 10.91 606 11.02 612 11.13 618 11.24 624 11.35Cable TV 180 3.27 182 3.31 184 3.34 185 3.37 187 3.41

5,270$ 95.82 5,323$ 96.78 5,376$ 97.74 5,430$ 98.72 5,484$ 99.71

4,990$ 90.73 5,143$ 93.50 5,299$ 96.34 5,458$ 99.24 5,622$ 102.21

Cash Flow Before Taxes 4,990$ 90.73 5,143$ 93.50 5,299$ 96.34 5,458$ 99.24 5,622$ 102.21

Net Operating Income (NOI)

Total Operating Expenses

Operating Expenses

Effective Rental Income

809.571.0072

Gross Operating Income


9/6/12 9:04 AM © 1993 - 2011 Cash Flow Analyzer® RentalSoftware.com

WOW Cabarete


Potential Rental Income 10,800$ 11,016$ 11,236$ 11,461$ 11,690$ Less: Vacancy & Credit Losses (540) (551) (562) (573) (585) Less: Operating Expenses (5,270) (5,323) (5,376) (5,430) (5,484)

Net Operating Income (NOI) 4,990$ 5,143$ 5,299$ 5,458$ 5,622$

Less: Annual Debt Service - - - - -

CASH FLOW Before Taxes 4,990$ 5,143$ 5,299$ 5,458$ 5,622$

Income Taxes: Benefit (Expense) @ 34% (769) (781) (834) (888) (944)

CASH FLOW After Taxes 4,221$ 4,362$ 4,465$ 4,570$ 4,678$

Projected Sales Price 97,850$ 101,764$ 106,852$ 113,263$ 120,059$ Less: Selling Expenses (5,871) (6,106) (6,411) (6,796) (7,204)

Adjusted Projected Sales Price 91,979$ 95,658$ 100,441$ 106,468$ 112,856$

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

SALE PROCEEDS Before Taxes 91,979$ 95,658$ 100,441$ 106,468$ 112,856$

(2,153) (3,808) (5,695) (7,842) (10,066)

SALE PROCEEDS After Taxes 89,826$ 91,850$ 94,746$ 98,625$ 102,790$

Cash Generated in Current Year 4,221$ 4,362$ 4,465$ 4,570$ 4,678$ Cash Generated in Previous Years n/a 4,221 8,582 13,047 17,617 Cash Generated from Property Sale 89,826 91,850 94,746 98,625 102,790 Original Initial Investment (85,750) (85,750) (85,750) (85,750) (85,750)

8,296$ 14,682$ 22,043$ 30,492$ 39,334$

Capitalization Rate Based on Cost 5.82% 6.00% 6.18% 6.37% 6.56%Capitalization Rate Based on Resale Price 5.10% 5.05% 4.96% 4.82% 4.68%

Net Present Value (NPV) - Before Taxes 5.00% 6,601 10,432 15,009 20,326 25,565 Net Present Value (NPV) - After Taxes 5.00% 3,818 5,536 7,928 10,981 14,046

Cash-on-Cash Return with Equity 9.67% 7.11% 8.01% 8.92% 8.97%Cash-on-Cash Return - Before Taxes 5.82% 6.00% 6.18% 6.37% 6.56%Cash-on-Cash Return - After Taxes 4.92% 5.09% 5.21% 5.33% 5.46%

Internal Rate-of-Return (IRR) - Before Taxes 13.08% 11.37% 11.11% 11.18% 11.20%Internal Rate-of-Return (IRR) - After Taxes 9.67% 8.41% 8.29% 8.43% 8.53%

Modified Internal Rate-of-Return (MIRR) - Before Taxes 13.08% 11.07% 10.56% 10.39% 10.20%Modified Internal Rate-of-Return (MIRR) - After Taxes 9.67% 8.22% 7.92% 7.90% 7.84%


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%

[email protected]


809.571.0072 Calle Principal, CabaretePlaza Ocean One, No. 3318


Notes and Discussion

Ocean 1 Real Estate


WOW CabaretePelican Beach, Calle Principal

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 - $10,000 was added to the purchase price for furniture and accessories to generate rental income. The rates of return were 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 $1,500 to $2,000/m2 range depending on location. Additional costs for furnishings, accessories, and appliances are in the $250 to $300 / m2 range. Although there are new-construction properties coming available, the locations will not be as prime as WOW Cabarete 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 $75,000 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.

WOW Cabarete For Sale

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