$201$ E S $1$st St$,$ Johnstown, CO $80534$

$13-$unit multifamily

Listed at $$2,400,000$

NOI: $$136,945$

Pro Forma NOI: $$157,859$

Going$-$In Cap Rate: $5\mathrm{.}71\%$

Pro Forma Cap Rate: $6\mathrm{.}58\%$

Class C building, built in $1920,$ new roof in $2017,$ two new boilers $(2021)$

$12$ out of $13$ units renovated

Step $1$: Lock in the Investment Strategy

Our two best options:

$$ Core Plus $$ if we don$$t plan to use any major reinvestment cash, just ride the appreciation and maybe modestly improve OPEX$/$rents as tenants turn over.

$$ Value Add $$ if we justify using excess REIT cash to upgrade the final unit, expand basement storage income, or invest in light amenities $($e$.$g$.,$ shared laundry, smart locks, etc.$).$

Rough Draft Decision: Go with Core Plus unless we can model value$-$add improvements that push NOI higher than $$157,859.$ Keep this open in case we want to pivot.

Step $2$: Rent Comp and Market Research

Goals:

$$ Find average rents for $1$BR$,2$BR$,$ and $3$BR units in Johnstown or similar towns in Weld County

$$ Identify vacancy rates, expense ratios, and market appreciation$/$cap rate trends

Rough Draft Sources:

$$ Rentometer.com

$$ Zillow $/$ Apartments.com listings in Johnstown

$$ CoStar or public listings for similar $1020$ unit apartments in Weld County

$$ Weld County Assessor website for tax data

Target Rent Comps $($to refine$)$:

$1$BR: ~$$1,250/$month

$2$BR: ~$$1,500/$month

$3$BR: ~$$1,700/$month

Step $3$: Build the $6-$Year Pro Forma and Financial Model

Key metrics required:

$$ Going$-$In Cap Rate $(5\mathrm{.}71\%)$

$$ Terminal Cap Rate $($estimate: $6\mathrm{.}00\%6\mathrm{.}25\%)$

$6-$year BTCFs and ATCFs

$$ Leveraged IRR $($BTIRR$,$ ATIRR$)$

$$ Cash$-$on$-$Cash Return

$$ Taxable income, tax assumptions $($Marginal: $35\%,$ Capital Gains: $20\%)$

Rough Draft Inputs:

$$ Purchase price: $$2,400,000$

$$ Down payment: $30\%=$ $$720,000$

$$ Loan: $$1,680,000,25-$year amortization, $7\%$ interest, $5-$year balloon

$$ Sale price in year $5$: use pro forma NOI x Terminal Cap Rate $($Year $6$ NOI $/6\mathrm{.}00\%$ cap$)$

$$ Expenses to sell: $7\%$ of sales price

$$ Expense growth: $3\%$ annually

$$ Rent growth: $2\mathrm{.}53\%$

$$ Roof exemption: No need to model roof replacement $($done in $2017)$

We$$ll build all this in Excel across multiple tabs or one detailed sheet.

Step $4$: Assign Team Roles

Each person picks a primary role:

$$ Pro Forma $+$ Excel Model Lead

$$ Build out Year $16$ income$/$expenses

$$ Model sale in Year $6$

$$ Run IRRs and returns

$$ Research $+$ Rent Comps Lead

$$ Get unit mix rents and OPEX comps

$$ Justify assumptions in notes or citations

$$ Slides $+$ Visuals Lead

$$ Create $2-$slide PowerPoint

$$ Add all required metrics to Slide $1$

$$ Make Slide $2$ about $$Why the REIT should invest$$

$$ Written Work Lead

$$ One$-$page defense $($strategy$,$ assumptions, why this is best$)$

$$ One$-$minute typed pitch