Christee Investment Property Analysis Quick Start

The purchase of income producing or rental property will be evaluated differently depending upon the investor’s goals. Christee provides all the analytics to allow for an informed decision.

Christee will provide details for a Real Estate Investment such as:

1. Required Cash and Rate of Return

2. Mortgage details including Debt Service and Debt Service Ratio

3. Income Analysis details including Net Operating Income, Cash Flow Projections, Tax Deductions, and Potential Tax Savings

4. Future Value Projections including Future Equity, Gross Profits, and Cash Analysis

5. Depreciation Report detailing Depreciation Basis, Annual Schedules for Straight, and Accelerated Depreciation

6. Potential Tax Overview including Capital Gains Basis, Net Profits, Capital Gain Taxes for both Federal and State, Recapture Amount, and Recapture Taxes

7. Investment Ratios such as ROI, Cap Rate, Debt Service Ratio, Return on Cash, GRM, and Return of Capital

Below is a brief explanation for the required and optional inputs.

Additionally, in the browser input form, there is a brief description for each input.

There are 17 Required Inputs for Christee Investment Module.

  • 1. Select State. State selection will determine calculations for closing cost and potential long-term capital gain taxes.
  • 2. Select County or City. This will have an impact of property tax calculations.
  • 3. Sales Price. Enter the price of the property under consideration for purchase.
  • 4. Land Value. Enter dollar amount of value of land. This amount is used to develop basis for depreciation schedules.
  • 5. Mortgage Interest Rate. Enter interest rate for the investment loan.

    Tip. A rate of 3 and one eight is entered as 3.125.

    Tip. Even if you are purchasing cash, you will need to enter a rate which will be ignored in report.

  • 6. Mortgage Term. Select from dropdown menu. Default setting is 30 Years.
  • 7. Annual Gross Income. Enter annual gross income for all parties, which may or not include potential income from property under consideration.

    Tip. In the investment module, Christee does not restrict results to qualifying ratios.

  • 8. Monthly Rent. Enter monthly rental income for unit under consideration for acquisition.
  • 9. Rental Increases. Enter a number representing how much you anticipate increasing rents annually during report period. An entry of 1 will represent a 1% annual increase for report period.
  • 10. Vacancy Allowance. Enter a percentage for loss of rental income on an annual basis due to turnover.
  • 11. Annual Maintenance. Enter dollar amount anticipated for annual maintenance.
  • 12. Property Management Fee. Enter a percentage for annual management services.
  • 13. Cost of Sale. Enter a number that represents the percentage for cost of sale. Typically, this would be the real estate commission.
  • 14. Report Years. Enter the number of years for report.  The report years cannot be greater than the mortgage term. The report is based upon sale of the property at end of report period.
  • 15. Appreciation. Enter a positive number such as 3 if you anticipate property values increasing 3% annually. Enter a negative number (-3) for declining property values. This entry will help to calculate long term value of property, potential equity, capital gains, etc.
  • 16. Credit Score. Enter a number between 550 and 800. The credit score will only affect calculations such as PMI calculations, if applicable.
  • 17. Married (Yes or No). If there are two borrowers, select ‘Yes’. This selection will impact things such as Federal Tax Bracket, Federal and State Capital Gains Tax Rate, and Net Investment Income Tax (NIIT). 

There are 16 Optional Inputs available to customize your report. NOT required for Christee Results.

  • 1. Property Taxes. You may enter actual property taxes for the property, otherwise, Christee will estimate the taxes based upon local tax rates.

    Tip. If you are not evaluating a specific property with known property taxes, you should leave this blank. Christee will estimate taxes on a hypothetical purchase.

  • 2. Close Date. You may enter an anticipated date for closing.

    Tip. Closing cost that are date sensitive such as interim interest or property tax adjustments will be based on this date. Otherwise, adjustments will be based upon preparation date, plus one month.

  • 3. Down Payment Percent.  Enter maximum percent of down payment. For a 20% payment enter 20.
  • 4. Limit Loan Amount. Enter Maximum Mortgage Amount for calculations.

    Tip. If you enter Max Loan Amount and Max Down Payment % , Christee will resolve potential conflicts.

  • 5. Seller Credit %. Enter the percentage of purchase price the seller will contribute to buyer closing cost.
  • 6. Seller Credit $. Enter dollar amount the seller or Lender will pay toward buyer closing cost.

    Tip. Christee will resolve any conflict between credit as a percent and credit as a dollar amount.

  • 7. Lender Fees. Enter dollar amount for items such as underwriting and processing fee charged by your Lender.
  • 8. Origination fee. Enter percentage of sales price for Lender as an origination fee.
  • 9. Condo. Enter Amount of monthly condominium or HOA fee, if any. This amount will be factored into your total monthly payment.
  • 10. All Cash (Yes or No). Select ‘yes’ if you are paying cash for the property.

    Tip. If you select ‘yes’, then the interest, mortgage term, and any other entries relating to a mortgage will be ignored.

  • 11. Private Financing (Yes or N0). If financing will be from a private source, such as owner financing, select ‘yes’. The loan to value will not be capped and Private Mortgage Insurance (PMI) will not be calculated.

    Tip. If PMI is included in your mortgage rate, then select ‘Yes’ to Private Financing to avoid calculation of PMI.

    Tip. You may enter up to 100% LTV with Private Financing, otherwise LTV capped at 90%.

  • 12. Cost Segregation Amount. Enter dollar amount you will be allocating to non-structural components of the property. This amount will be depreciated over a shorter period of time than structural depreciation (27.5 years).

    Tip. Please research or consult an expert for better understanding of Cost Segregation.

  • 13. Cost Segregation Period. Enter the years to depreciate cost segregation amount. Typically, 5 to 15 years. If left blank, the default setting is 7 years.
  • 14. Name. Optional Input. If name is entered, then PDF file will include name.
  • 15. Phone. Enter your phone number to have a Christee Certified Agent to contact you.
  • 16. Email Address. By entering a valid email address, you have the option to have the PDF report emailed to yourself or another person.

    Tip. If this field is blank, then you may download the PDF report.

    Tip. Make sure you hit the ‘submit’ button after entering an email address.

Christee provides the below projections and data to review with your tax advisor:

Basic Real Estate Investment definitions.

  • 1. Capitalization Rate. The capitalization rate, also known as cap rate, is used in the world of commercial real estate to indicate the rate of return that is expected to be generated on a real estate investment property. This measure is computed based on the net income that the property is expected to generate and is calculated by dividing net operating income by property asset value and is expressed as a percentage. It is used to estimate the investor’s potential return on their investment in the real estate market. The formula is Capitalization Rate = [Net Operating Income / Current Market Value].
  • 2. Return on Cash Investment (ROI). A metric used to evaluate many investments. The formula is [Current Value of Investment-Cost of Investment]/Cost of Investment multiplied by 100. The results show gross profit from investment as a percent of original investment.
  • 3. Capital Gains.  Capital gain, for income tax purposes, is the gain realized from the sale of capital assets, such as investment real estate. The difference between the original purchase price and the sale price is the gain realized. If the asset was held for more than one year, the capital gain is long term. Federal Capital gain rates are based upon your income and are between 0  and 20%. Some States also impose a Capital Gain tax.
  • 4. Recapture Tax. A tax due based upon the depreciation that was reported each year on your tax returns. As a result of depreciation, the owner of the rental property saves taxes each year. Upon the sale of the property a recapture tax is owed. The recapture tax is based upon ordinary income tax bracket and is capped at 25%.
  • 5. Straight Line Depreciation. Straight-line depreciation is the depreciation of real property in equal amounts over a dedicated lifespan of the property that’s allowed for tax purposes which is 27.5 years.
  • 6. Cost Segregation Depreciation. A cost segregation analysis helps you identify assets to count as personal property for the purposes of depreciation, giving you the opportunity to calculate their depreciation over a shorter period of time as compared to straight-line depreciation. A cost segregation analysis identifies structural and non-structural components of the improvement. Structural components must be depreciated based upon straight-line depreciation schedule. The primary downside to cost segregation relative to straight-line calculation is the cost involved in a cost segregation study.
  • 7. Net Operating Income (NOI). NOI equals all revenue from the property, minus all reasonably necessary operating expenses. Christee allows for vacancy allowance, management fees, and maintenance cost when calculating NOI.
  • 8. Cash Flow. Cash flow can be either positive or negative. Cash flow is defined as NOI minus debt service, or rental income minus all expenses including mortgage payments.
  • 9. Debt Service Ratio Coverage. Relationship between Net Operating Income and Debt Service. The formula is [NOI/Debt Service].
  • 10. Annual Real Loss. The rental real estate loss allowance is a federal tax deduction available to taxpayers who own and rent property in the U.S. Up to $25,000 may be deducted as a real estate loss per year as long as the individual’s adjusted gross income is $100,000 or less. The deduction phases out for individuals earning between $100,000 and $150,000. People with higher adjusted gross incomes may not be eligible for the deduction.

We hope you enjoy your AskChristee experience!

Results will be displayed in your browser. Additional detail is available in the PDF file. Please review results with a recommended AskChristee Agent and Lender.

See the Resources tab for more Information. Visit Video tab for demonstration and greater insight.