Undergraduate real estate course project regarding real estate investment analysis for properties in Tucson, AZ.

1. Overview of Presentation Overview of Buyer Assumptions Description of Property (Pictures, Floor Plan, Neighborhood, Amenities, Surrounding Businesses) Supply & Demand Factors Valuation of Property Mortgage Leasing Sale of Property Cash Flows (Before & After Tax) Return Characteristics Conclusion References

4. 1045 Irwin Pl Tucson, AZ 85719 Description of Property Asking Price: $319,000 | Year Built: 2007 Type: Single Family | Beds: 3 | Baths: 2.5 | SqFt: 1,525 sq ft | Lot Size: 1920sf

5. Description of Property

6. Description of Property

7. Entry Way Neighborhood Images Courtesy of: Vicki Locatelli Description of Property

8. Images Courtesy of: Vicki Locatelli Description of Property Dining Room Kitchen

9. Description of Property Living Room Master Bathroom Images Courtesy of: Vicki Locatelli

10. Description of Property

11. Description of Property style

12. Surrounding Businesses

16. Supply and Demand: Local “ Let’s remember that real estate markets are local and Tucson’s dynamic economic climate and a ‘pent up buyer demand’ lends itself to a stabilized, then healthy and growing market in 2008.” -Judy Lowe, 2007 MLS President

17. Valuation of Property Comparables Approach – Proximity of Properties: Comparable 1 Comparable 2 Comparable 3

18. Valuation of Property Comparables Approach: Comparable 1: 3936 N Placita La Vina, Tucson, AZ 85719 3 Beds, 2.75 baths, 1,582 sq ft, Built in 1999 Sold for: $300,000 Comparable 2 : 1562 E Painted Colt Loop, Tucson, AZ 85719 3 beds, 2.75 baths, 1,612 sq ft, Condo, Built in 1996 Sold for: $285,000 Comparable 3 : 4255 N Rillito Creek Pl, Tucson, AZ 85719 3 beds, 3.0 baths, 1,758 sq ft; Built in 1994 Sold for: $319,500 Average Price Per Square Foot: $182.72

19. Valuation of Property Comparables Approach For Investment Property: Using average price per square foot as basis, we adjusted accordingly: Avg. Price Sq Ft.: $182.72 + New construction premium; pristine condition: $18.00 + Numerous Upgrades (porcelain tile, granite counter tops, etc.) $10.00 + Energy efficiency upgrades $2.00 - Half Bath vs. Full Bathroom $6.90 ________ Investment Property Price Per Square Foot $205.82 Comparable Valuation Price: $313,876 Source: National Association of Home Builders

20. Valuation of Property NOI Approach For Investment Property: Using the NOI approach, we calculated the value of the property as seen below: NOI Valuation Price: $361,237 *Cap Rate: 5.44% *

25. IRR Fixed Mortgage

26. IRR Interest Only Mortgage

29. Return Characteristics (NPV) NPV of Amortizing Mortgage: $36,520.32 NPV of Interest Only Mortgage: $36,877.30

30. Return Characteristics (Cap Rate) Going-In Cap Rate = 1 st Year NOI / Purchase Price $16,820 / $309,000 5.44%

32. 267476.89 / (1.1767)^10 = 52556.78 52556.78 / 61800 = 0.85 227148 / (1.1815)^10 = 42852.06 42852.06 / 61800 = 0.70 30 yr Fixed 6% JP Morgan 30 yr Fixed I/O 6% American Lending Sale of Building = 85% Cash Flows = 15% Sale of Building = 70% Cash Flows = 30% Partitioning the IRR = Less Risky

34. References Mortgages : www.bankrate.com, JP Morgan Chase (Mike Takacs – Loan Officer) Rental Property : http://www.realestate.com/Property/6829676-1045-Irwin-Pl-Tucson-AZ-85719-20800407.aspx http://www.realestate.com/axx/applications/cob/asp/NSHomeView.asp?homeid=30211889 Realtor : Vicki Locatelli; 520-247-6000 Tucson and U of A demographics : http://www.union.arizona.edu/csil/csa/ , http://en.wikipedia.org/wiki/Tucson,_Arizona#Demographics Labor force and employment : http://www.city-data.com/us-cities/The-West/Tucson-Economy.html Tucson real estate market analysis : http://www.michaelkrotchie.com/blog/tucson-real-estate-market-may-2007-analysis/ Tucson economic overview PDF : Economic and Business Research Program, Karl Eller Graduate School of Management, College of Business and Public Administration, The University of Arizona MTLUS PDF : Prepared for Pima County Real Estate Research Council, Inc. by The University of Arizona Office of Economic Development, November 14, 2007 MLS 07 year end market stats PDF : Copyright 2008 Tucson Association of REALTORS® Multiple Listing Service, Inc. John Burns national market housing review power point : John Burns, Real Estate Consulting, [email_address] NAHB: http://www.nahb.org/generic.aspx?genericContentID=62422