12 Year Investment Plan

  • £28,000
    Capital
  • £16,000
    Return
  • Total £44,000
  • 57% ROI
  • Term 1
    (6 Years)
  • £34,000
    Capital
  • £38,000
    Return
  • Total £72,000
  • 112% ROI
  • Term 1 & 2
    (12 Years)
Years Annual Returns (%)
1 13
2 14
3 16
4 17
5 20
6 22
7 13
8 16
9 20
10 27
11 40
12 80

Term 01

Payable to the investor (residual value) if exiting at end of year 6: £8,000.00

Initial Cost Price: £28,000

Monthly rental returns: £500

Term Year 1 2 3 4 5 6
Cost Price Reducing Balance (note 1) £28,000 £25,667 £23,333 £21,000 £18,667 £16,333
Yearly Rental Return (£500 * 12 months - note 2) £6,000 £6,000 £6,000 £6,000 £6,000 £6,000
Yearly Capital Returns (note 3) £2,333 £2,333 £2,333 £2,333 £2,333 £2,333
Yearly Profit (note 4) £3,667 £3,667 £3,667 £3,667 £3,667 £3,667
Returns Per Year (note 5) 13% 14% 16% 17% 20% 22%
Average return over term 1 (6 years) 17%

Term 02

Payable by investor for refurbishment of unit: cost at beginning of year 7:  £6,000

Term Year 7 8 9 10 11 12
Cost price Reducing Balance (note 1) £20,000 £16,667 £13,333 £10,000 £6,667 £3,333
Yearly rental returns (£500 * 12 months - note 2) £6,000 £6,000 £6,000 £6,000 £6,000 £6,000
Yearly Capital Returns (note 3) £3,333 £3,333 £3,333 £3,333 £3,333 £3,333
Yearly Profit (note 4) £2,667 £2,667 £2,667 £2,667 £2,667 £2,667
Returns Per Year (note 5) 13% 16% 20% 27% 40% 80%
Average return over term 2 (6 years) 33%

Notes for single unit financial analysis £28,000 12-year plan

Term 1

  1. Calculated by subtracting the yearly capital return in note 3. i.e. 28,000 – 2,333 = year 2 £25,667, and so on. Year 7 includes the £6,000 refurbishment fee (refer note 3).
  2. Calculated as follows: £500 rent per month x 12 months = £6,000 per annum
  3. For years 1 – 6 unit cost of £28,000 is divided by 12 years to make £2,333 and then for years 7 – 12 the refurbishment fee of £6000 is divided over the remaining 6 years and added to the remaining yearly capital return figure = (£6000 / 6 years) + £2,333 = £3,333 yearly capital return.
  4. Calculated by subtracting the annual capital return from the annual rental income. i.e. £6,000 – £2,333 = £3,667
  5. Calculated by dividing the profit by the cost price reducing balance, year on year. i.e. £3,667/£28,000 * 100 = 13%.

Term 2

  • If the investor decides to continue into Term 2 they will pay for the additional refurb cost of £6,000 and the annual capital repayment of £1,000 is added to the yearly capital return figure as per note 3 above and reflected in the term 2 table under “Yearly Capital Returns”.
  • There is no residual value of the unit after 12 years as the cost of removal and disposal of the unit from the plot at the end of the 12 year period equates to any value the unit may have at the expiry of the contract.

 

6 Year Investment Plan

  • £28,000
    Capital
  • £16,000
    Return
  • Total £44,000
  • 57% ROI
  • Term 1 (6 Years)
Years Annual Returns (%)
1 5
2 6
3 7
4 10
5 14
6 29

Term 01

Payable to the investor (residual value – note 6) if exiting at end of year 6: £8,000

Initial Cost Price: £28,000

Monthly rental returns: £500

Term Year 1 2 3 4 5 6
Cost price (reducing balance) (note 1) £28,000 £23,333 £18,667 £14,000 £9,333 £3,333
Yearly rental returns (£500 * 12 months - note 2) £6,000 £6,000 £6,000 £6,000 £6,000 £6,000
Yearly capital returns (note 3) £4,667 £4,667 £4,667 £4,667 £4,667 £4,667
Yearly profit (note 4) £1,333 £1,333 £1,333 £1,333 £1,333 £1,333
Returns per year (note 5) 5% 6% 7% 10% 14% 29%
Average return over term 1 (6 years) 12%

Notes for single unit financial analysis £28,000 6-year plan

Term 1

  1. Calculated by subtracting the yearly capital return in note 3. i.e. £28,000 – £4,667 = year 2 £23,333.
  2. Calculated as follows: £500 rent per month x 12 months = £6,000 per annum
  3. For years 1 – 6 unit cost of £28,000 is divided by 6 years to make £4,667.
  4. Calculated by subtracting the annual capital return from the annual rental income. i.e. £6,000 – £4,667 = £1,333
  5. Calculated by dividing the profit by the cost price reducing balance, year on year. i.e. £1,333/£28,000 * 100 = 5%.
  6. Balloon payment of £8,000 (residual value of the unit) in the scenario that the investor decides not to extend the plan to term 2.