REAL ESTATE INVESTMENT ANALYSISREAL ESTATE INVESTMENT ANALYSISREAL ESTATE INVESTMENT ANALYSISREAL ESTATE INVESTMENT ANALYSISEnter your numbers in the yellow background boxes only.Enter your numbers in the yellow background boxes only.Enter your numbers in the yellow background boxes only.Enter your numbers in the yellow background boxes only.Enter your numbers in the yellow background boxes only.Enter your numbers in the yellow background boxes only.Enter your numbers in the yellow background boxes only.

Purchase Price:Purchase Price: 410,000Down Payment:Down Payment: 123,000Interest Rate on Loan:Interest Rate on Loan:Interest Rate on Loan: 4.50 % p.a.Term of Loan:Term of Loan: 30 yrs.Improvement Ratio:Improvement Ratio: 0 % % of total price that is allocated to the building for depreciation purposes% of total price that is allocated to the building for depreciation purposes% of total price that is allocated to the building for depreciation purposes% of total price that is allocated to the building for depreciation purposes% of total price that is allocated to the building for depreciation purposes% of total price that is allocated to the building for depreciation purposesNo. Yrs. of Depreciation:No. Yrs. of Depreciation:No. Yrs. of Depreciation: 27.5 yrs. 27.5 for rental27.5 for rental 39.5 years for commercial.39.5 years for commercial.Scheduled Annual Gross Income:Scheduled Annual Gross Income:Scheduled Annual Gross Income: 12,000Vacancy/Collection losses:Vacancy/Collection losses:Vacancy/Collection losses: 0.00 %(Annual Operating Expenses)(Annual Operating Expenses)(Annual Operating Expenses) --------- Property taxes : Property taxes : 4,500 Insurance: Insurance: 350 Electricity: Electricity: 50 Gas: 0 Oil: 0 Water: 0 Trash: 0 Management: Management: 50.00 % of income% of income Repairs/Maintenance: Repairs/Maintenance: Repairs/Maintenance: 0.00 % of income% of income Advertising: Advertising: 0 Telephone: Telephone: 0 Other: 0 Other: 0 Other: 0 Other: 0Annual Increase of Income:Annual Increase of Income:Annual Increase of Income: 5.00 % p.a.Annual Increase of Expenses:Annual Increase of Expenses:Annual Increase of Expenses: 5.00 % p.a.Annual Appreciation Rate:Annual Appreciation Rate:Annual Appreciation Rate: 2.00 % p.a.Investor's Tax Bracket:Investor's Tax Bracket:Investor's Tax Bracket: 25.00 %Capital Gain Tax Rate:Capital Gain Tax Rate:Capital Gain Tax Rate: 15.00 % This varies depending on the tax payer.This varies depending on the tax payer.This varies depending on the tax payer.This varies depending on the tax payer.CGT Rate on Recaptured DepreciationCGT Rate on Recaptured DepreciationCGT Rate on Recaptured Depreciation 25.00 % CGT= capital gains tax (ordinary income)CGT= capital gains tax (ordinary income)CGT= capital gains tax (ordinary income)CGT= capital gains tax (ordinary income)Expected Capital Improvements:Expected Capital Improvements:Expected Capital Improvements: 2,000Approx. Buying Costs:Approx. Buying Costs:Approx. Buying Costs: 3.00 % of totalApprox. Sales Costs:Approx. Sales Costs: 7.00 % of total

RESULTSRESULTS

ACQUISITION DATAACQUISITION DATA LOAN DATALOAN DATA DEPRECIATION DEPRECIATION

Price 410,000 Interest % 4.50% Land 100% 410,000Dn. Pymt. 123,000 No. Yrs. 30 Improvement 0% 14,300Loan Amt. 287,000 Mo. P & I 1,454 No. Yrs. 27.5Buy Costs 12,300 Yr. P & I 17,450 Yr. Depr. 520Cap Impr. 2,000

ANNUAL OPERATING INCOMEANNUAL OPERATING INCOMEANNUAL OPERATING INCOME Yr.1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10

Increase in incomeIncrease in income 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%Expected Gross IncomeExpected Gross IncomeExpected Gross Income 12,000 12,600 13,230 13,892 14,586 15,315 16,081 16,885 17,729 18,616less Vacancy/Collection lossesless Vacancy/Collection losses 0.00% 0 0 0 0 0 0 0 0 0 0EFFECTIVE GROSS INCOMEEFFECTIVE GROSS INCOMEEFFECTIVE GROSS INCOME 12,000 12,600 13,230 13,892 14,586 15,315 16,081 16,885 17,729 18,616(EGI)

ANNUAL OPERATING EXPENSESANNUAL OPERATING EXPENSESANNUAL OPERATING EXPENSES Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10

(Increase in expenses)(Increase in expenses) 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%Property TaxesProperty Taxes 4,500 4,725 4,961 5,209 5,470 5,743 6,030 6,332 6,649 6,981Insurance 350 368 386 405 425 447 469 492 517 543Electricity 50 53 55 58 61 64 67 70 74 78Gas 0 0 0 0 0 0 0 0 0 0Oil 0 0 0 0 0 0 0 0 0 0Water 0 0 0 0 0 0 0 0 0 0Trash 0 0 0 0 0 0 0 0 0 0Management 50.00% 6,000 6,300 6,615 6,946 7,293 7,658 8,041 8,443 8,865 9,308Repairs/MaintenanceRepairs/Maintenance 0.00% 0 0 0 0 0 0 0 0 0 0Advertising 0 0 0 0 0 0 0 0 0 0Telephone 0 0 0 0 0 0 0 0 0 0Other 0 0 0 0 0 0 0 0 0 0Other 0 0 0 0 0 0 0 0 0 0Other 0 0 0 0 0 0 0 0 0 0TOTAL OPERATING EXPENSESTOTAL OPERATING EXPENSESTOTAL OPERATING EXPENSES 10,900 11,445 12,017 12,618 13,249 13,911 14,607 15,337 16,104 16,909Op. Expenses as %age of incomeOp. Expenses as %age of incomeOp. Expenses as %age of income 90.83% 90.83% 90.83% 90.83% 90.83% 90.83% 90.83% 90.83% 90.83% 90.83%

NET OPERATING INCOMENET OPERATING INCOMENET OPERATING INCOME 1,100 1,155 1,213 1,273 1,337 1,404 1,474 1,548 1,625 1,706(NOI) excluding financing costs(NOI) excluding financing costs(NOI) excluding financing costs

CASH FLOW (BEFORE TAXES)CASH FLOW (BEFORE TAXES)CASH FLOW (BEFORE TAXES) Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10

Net Operating IncomeNet Operating Income 1,100 1,155 1,213 1,273 1,337 1,404 1,474 1,548 1,625 1,706 -Yrly. P & I 17,450 17,450 17,450 17,450 17,450 17,450 17,450 17,450 17,450 17,450CASH FLOW (BEFORE TAXES)CASH FLOW (BEFORE TAXES)CASH FLOW (BEFORE TAXES) -16,350 -16,295 -16,237 -16,177 -16,113 -16,046 -15,976 -15,902 -15,825 -15,744

TAX BENEFITTAX BENEFIT Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10

Net Operating IncomeNet Operating Income 1,100 1,155 1,213 1,273 1,337 1,404 1,474 1,548 1,625 1,706 -Annual Interest -Annual Interest 12,820 12,608 12,385 12,152 11,909 11,654 11,388 11,110 10,818 10,514 -Annual Depreciation -Annual Depreciation 520 520 520 520 520 520 520 520 520 520Taxable IncomeTaxable Income -12,240 -11,973 -11,692 -11,399 -11,092 -10,771 -10,434 -10,082 -9,713 -9,327x Investor's Tax Bracketx Investor's Tax Bracket 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%TAX BENEFITTAX BENEFIT 3,060 2,993 2,923 2,850 2,773 2,693 2,609 2,520 2,428 2,332

MORTGAGE PRINCIPAL REDUCTIONMORTGAGE PRINCIPAL REDUCTIONMORTGAGE PRINCIPAL REDUCTION Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10

Start of Yr. BalanceStart of Yr. Balance 287,000 282,370 277,527 272,462 267,164 261,623 255,827 249,765 243,425 236,793 -End of Yr. Balance -End of Yr. Balance 282,370 277,527 272,462 267,164 261,623 255,827 249,765 243,425 236,793 229,857TOTAL PRINCIPAL REDUCTIONTOTAL PRINCIPAL REDUCTIONTOTAL PRINCIPAL REDUCTION 4,630 4,843 5,065 5,298 5,541 5,796 6,062 6,341 6,632 6,936

PROPERTY APPRECIATION PROPERTY APPRECIATION PROPERTY APPRECIATION Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10

(Increase) 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%Start of Year ValueStart of Year Value 410,000 418,200 426,564 435,095 443,797 452,673 461,727 470,961 480,380 489,988End of Year ValueEnd of Year Value 418,200 426,564 435,095 443,797 452,673 461,727 470,961 480,380 489,988 499,788TOTAL ANNUAL APPRECIATIONTOTAL ANNUAL APPRECIATIONTOTAL ANNUAL APPRECIATION 8,200 8,364 8,531 8,702 8,876 9,053 9,235 9,419 9,608 9,800

FINANCIAL ANALYSISFINANCIAL ANALYSISFINANCIAL ANALYSIS

RETURN ON INITIAL EQUITY (Assume Initial Equity = Down Payment + Capital Improvement)RETURN ON INITIAL EQUITY (Assume Initial Equity = Down Payment + Capital Improvement)RETURN ON INITIAL EQUITY (Assume Initial Equity = Down Payment + Capital Improvement)RETURN ON INITIAL EQUITY (Assume Initial Equity = Down Payment + Capital Improvement)RETURN ON INITIAL EQUITY (Assume Initial Equity = Down Payment + Capital Improvement)RETURN ON INITIAL EQUITY (Assume Initial Equity = Down Payment + Capital Improvement)RETURN ON INITIAL EQUITY (Assume Initial Equity = Down Payment + Capital Improvement)RETURN ON INITIAL EQUITY (Assume Initial Equity = Down Payment + Capital Improvement)

Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10

Cash Flow (Before Taxes)Cash Flow (Before Taxes)Cash Flow (Before Taxes) -16,350 -16,295 -16,237 -16,177 -16,113 -16,046 -15,976 -15,902 -15,825 -15,744Tax Benefit 3,060 2,993 2,923 2,850 2,773 2,693 2,609 2,520 2,428 2,332Debt ReductionDebt Reduction 4,630 4,843 5,065 5,298 5,541 5,796 6,062 6,341 6,632 6,936Appreciation 8,200 8,364 8,531 8,702 8,876 9,053 9,235 9,419 9,608 9,800$ RETURN ON INITIAL EQUITY $ RETURN ON INITIAL EQUITY $ RETURN ON INITIAL EQUITY -460 -95 282 673 1,077 1,496 1,929 2,378 2,843 3,324

INITIAL EQUITY:INITIAL EQUITY:Down PaymentDown Payment 123,000 123,000 123,000 123,000 123,000 123,000 123,000 123,000 123,000 123,000Capital ImprovementCapital Improvement 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000TOTAL INITIAL EQUITYTOTAL INITIAL EQUITYTOTAL INITIAL EQUITY 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000 125,000

% RETURN ON INITIAL EQUITY% RETURN ON INITIAL EQUITY% RETURN ON INITIAL EQUITY -0.37% -0.08% 0.23% 0.54% 0.86% 1.20% 1.54% 1.90% 2.27% 2.66%

RETURN ON TOTAL EQUITY (Assume Total Equity = Start of Year Value - Start of Year Loan Balance)RETURN ON TOTAL EQUITY (Assume Total Equity = Start of Year Value - Start of Year Loan Balance)RETURN ON TOTAL EQUITY (Assume Total Equity = Start of Year Value - Start of Year Loan Balance)RETURN ON TOTAL EQUITY (Assume Total Equity = Start of Year Value - Start of Year Loan Balance)RETURN ON TOTAL EQUITY (Assume Total Equity = Start of Year Value - Start of Year Loan Balance)RETURN ON TOTAL EQUITY (Assume Total Equity = Start of Year Value - Start of Year Loan Balance)RETURN ON TOTAL EQUITY (Assume Total Equity = Start of Year Value - Start of Year Loan Balance)RETURN ON TOTAL EQUITY (Assume Total Equity = Start of Year Value - Start of Year Loan Balance)RETURN ON TOTAL EQUITY (Assume Total Equity = Start of Year Value - Start of Year Loan Balance)

Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10

Cash Flow (Before Taxes)Cash Flow (Before Taxes)Cash Flow (Before Taxes) -16,350 -16,295 -16,237 -16,177 -16,113 -16,046 -15,976 -15,902 -15,825 -15,744Tax Benefit 3,060 2,993 2,923 2,850 2,773 2,693 2,609 2,520 2,428 2,332Debt ReductionDebt Reduction 4,630 4,843 5,065 5,298 5,541 5,796 6,062 6,341 6,632 6,936Appreciation 8,200 8,364 8,531 8,702 8,876 9,053 9,235 9,419 9,608 9,800$ RETURN ON TOTAL EQUITY$ RETURN ON TOTAL EQUITY$ RETURN ON TOTAL EQUITY -460 -95 282 673 1,077 1,496 1,929 2,378 2,843 3,324

TOTAL EQUITY:TOTAL EQUITY:Beginning of Year Value inc. Cap. Imp.Beginning of Year Value inc. Cap. Imp.Beginning of Year Value inc. Cap. Imp. 412,000 420,200 428,564 437,095 445,797 454,673 463,727 472,961 482,380 491,988Begining of Year BalanceBegining of Year BalanceBegining of Year Balance 287,000 282,370 277,527 272,462 267,164 261,623 255,827 249,765 243,425 236,793TOTAL EQUITYTOTAL EQUITY 125,000 137,830 151,037 164,633 178,633 193,050 207,899 223,196 238,955 255,195

% RETURN ON TOTAL EQUITY% RETURN ON TOTAL EQUITY% RETURN ON TOTAL EQUITY -0.37% -0.07% 0.19% 0.41% 0.60% 0.77% 0.93% 1.07% 1.19% 1.30%

ESTIMATED SALE PROCEEDS (AFTER EXPENSES & TAXES)ESTIMATED SALE PROCEEDS (AFTER EXPENSES & TAXES)ESTIMATED SALE PROCEEDS (AFTER EXPENSES & TAXES)ESTIMATED SALE PROCEEDS (AFTER EXPENSES & TAXES)ESTIMATED SALE PROCEEDS (AFTER EXPENSES & TAXES)ESTIMATED SALE PROCEEDS (AFTER EXPENSES & TAXES)

Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10ADJUSTED COST BASISADJUSTED COST BASISADJUSTED COST BASISOriginal BasisOriginal Basis 422,300 422,300 422,300 422,300 422,300 422,300 422,300 422,300 422,300 422,300+ Capital Improvements`+ Capital Improvements`+ Capital Improvements` 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000+ Sales Costs+ Sales Costs 7.00% 29,274 29,859 30,457 31,066 31,687 32,321 32,967 33,627 34,299 34,985- Accum. Depreciation- Accum. Depreciation 520 1,040 1,560 2,080 2,600 3,120 3,640 4,160 4,680 5,200= ADJUSTED COST BASIS= ADJUSTED COST BASIS= ADJUSTED COST BASIS 453,054 453,119 453,197 453,286 453,387 453,501 453,627 453,767 453,919 454,085

True CAPITAL GAINTrue CAPITAL GAINSales Price 418,200 426,564 435,095 443,797 452,673 461,727 470,961 480,380 489,988 499,788Non adjusted costNon adjusted cost 453,574 454,159 454,757 455,366 455,987 456,621 457,267 457,927 458,599 459,285True Gain or lossTrue Gain or loss -35,374 -27,595 -19,661 -11,569 -3,314 5,106 13,694 22,454 31,389 40,503

CAPITAL GAIN for tax purposesCAPITAL GAIN for tax purposesCAPITAL GAIN for tax purposesSales Price 418,200 426,564 435,095 443,797 452,673 461,727 470,961 480,380 489,988 499,788- Adjusted Cost Basis- Adjusted Cost Basis 453,054 453,119 453,197 453,286 453,387 453,501 453,627 453,767 453,919 454,085CAPITAL GAIN (tax purposes)CAPITAL GAIN (tax purposes)CAPITAL GAIN (tax purposes) -34,854 -26,555 -18,101 -9,489 -714 8,226 17,334 26,614 36,069 45,703

CAPITAL GAIN TAXCAPITAL GAIN TAXCapital Gain for tax purposesCapital Gain for tax purposesCapital Gain for tax purposes -34,854 -26,555 -18,101 -9,489 -714 8,226 17,334 26,614 36,069 45,703= Tax on Capital Gain= Tax on Capital Gain -3,879 -2,559 -1,215 153 1,546 2,964 4,408 5,878 7,375

EST. NET SALE PROCEEDS (after tax)EST. NET SALE PROCEEDS (after tax)EST. NET SALE PROCEEDS (after tax)EST. NET SALE PROCEEDS (after tax)Sales Price 418,200 426,564 435,095 443,797 452,673 461,727 470,961 480,380 489,988 499,788- Sales Costs- Sales Costs 29,274 29,859 30,457 31,066 31,687 32,321 32,967 33,627 34,299 34,985- Ending Loan Balance- Ending Loan Balance 282,370 277,527 272,462 267,164 261,623 255,827 249,765 243,425 236,793 229,857= Proceeds Before Taxes= Proceeds Before Taxes= Proceeds Before Taxes 106,556 119,177 132,176 145,567 159,363 173,578 188,228 203,329 218,896 234,946- Capital Gain Tax- Capital Gain Tax 0 -3,879 -2,559 -1,215 153 1,546 2,964 4,408 5,878 7,375= EST NET SALE PROCEEDS A/T= EST NET SALE PROCEEDS A/T= EST NET SALE PROCEEDS A/T 106,556 123,056 134,736 146,782 159,210 172,032 185,264 198,921 213,017 227,571You must hold the property for a year and a day to qualify for long term capital gains tax treatment.You must hold the property for a year and a day to qualify for long term capital gains tax treatment.You must hold the property for a year and a day to qualify for long term capital gains tax treatment.You must hold the property for a year and a day to qualify for long term capital gains tax treatment.You must hold the property for a year and a day to qualify for long term capital gains tax treatment.You must hold the property for a year and a day to qualify for long term capital gains tax treatment.You must hold the property for a year and a day to qualify for long term capital gains tax treatment.You must hold the property for a year and a day to qualify for long term capital gains tax treatment.You must hold the property for a year and a day to qualify for long term capital gains tax treatment.

DEBT SERVICE COVERAGE RATIO (DSC) DEBT SERVICE COVERAGE RATIO (DSC) DEBT SERVICE COVERAGE RATIO (DSC) DEBT SERVICE COVERAGE RATIO (DSC)

Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10

Net Operating IncomeNet Operating Income 1,100 1,155 1,213 1,273 1,337 1,404 1,474 1,548 1,625 1,706÷ Debt Service (Yr. P & I)÷ Debt Service (Yr. P & I)÷ Debt Service (Yr. P & I) 17,450 17,450 17,450 17,450 17,450 17,450 17,450 17,450 17,450 17,450DSC 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09 0.09 0.10

(Page 7 of 7)This report is based on certain assumptions.The projections are estimates onlyThis report is based on certain assumptions.The projections are estimates onlyThis report is based on certain assumptions.The projections are estimates onlyThis report is based on certain assumptions.The projections are estimates onlyThis report is based on certain assumptions.The projections are estimates onlyThis report is based on certain assumptions.The projections are estimates onlyThis report is based on certain assumptions.The projections are estimates onlyThis report is based on certain assumptions.The projections are estimates onlyThis report is based on certain assumptions.The projections are estimates onlyAnyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.Anyone using or relying on this report is advised to seek competent legal, financial, and/or tax advice.

Return on equity includes appreciation, principal reduction and tax benefit.Return on equity includes appreciation, principal reduction and tax benefit.Return on equity includes appreciation, principal reduction and tax benefit.Return on equity includes appreciation, principal reduction and tax benefit.Return on equity includes appreciation, principal reduction and tax benefit.Return on equity includes appreciation, principal reduction and tax benefit.Return on equity includes appreciation, principal reduction and tax benefit.Return on equity includes appreciation, principal reduction and tax benefit.Return on equity includes appreciation, principal reduction and tax benefit.