Allocating Capital Worksheet - Alternative Scenarios

	A	B	C	D	E	F	G	H
1	Allocating Capital Worksheet - Alternative Scenarios
2
3	Background Note:
4	The Housing Committee has had some discussion about the school buying an exisitng property such as the property at 368 Overlook listed at $2.8 million, or the Purple Gate property at 201 Mesa Rd listed at $3.8 million - to create housing for teachers. I think that amount of money could be better spent on purpose built housing, or even subsidising rents. The purpose of this spreadsheet was to be an aid in conversation with the ad hoc Housing Committee where alternative scenarios are explained.
5
6	$2,500,000	Cash Available
7	5%	Target Investment Return (amount withdrawn every year without reducing principal)
8
9
10	Option 1 - Invest Principal to Buy a Multiunit Property (eg. Overlook Property)
11	$2,500,000	Cash Available
12	$2,500,000	Cost of Building
13	$0	Remaining Cash for future
14
15	Result (Assume Overlook property purchased for $2.5 million)
16	School owns 3 units, of a specific size and type, and gets $60,000 annually from their $2.5 million investment.
17
18	$3,000	Income from Master Unit - 3 bedroom apartment
19	$1,750	Income from Outbuilding A - 1 bedroom apartment
20	$1,750	Income from Outbuilding 1 - 1 bedroom apartment
21
22	$6,500	Total Gross Monthly Income
23	$1,500	Monthly Repairs/Improvements/Upkeep, etc.
24	$5,000	Net Monthly Income
25	x 12
26	$60,000	Annual Income to School
27
28
29	Analysis: only 3 families served, with inflexible housing sizes that may not match need. Won't pay principle back.
30
31
32	Option 2 - Invest Principal in Portfolio and use interest to subsidize teacher/staff rent.
33	$2,500,000	Cash Invested
34	$125,000	Interest available to subsidize rents.
35
36	Result
37	School owns no units.
38	School has money to subsidize rents in perpetuity.
39	$500	Available per staff member			$1,000
40
41	$500	Staff 1			$1,000	Staff 1
42	$500	Staff 2			$1,000	Staff 2
43	$500	Staff 3			$1,000	Staff 3
44	$500	Staff 4			$1,000	Staff 4
45	$500	Staff 5			$1,000	Staff 5
46	$500	Staff 6			$1,000	Staff 6
47	$500	Staff 7			$1,000	Staff 7
48	$500	Staff 8			$1,000	Staff 8
49	$4,000	Monthly EXPENSE for School			$8,000	Monthly EXPENSE for School
50	$48,000	Annual EXPENSE for School			$96,000	Annual EXPENSE for School
51
52	Analysis: creates more competition with local families for rentals - further reducing enrollment.
53
54
55	Option 3 - Invest Principal to Build Specialty Housing On Existing Campus
56	$2,500,000	Cash Invested
57	$0	Land Cost
58	8,333	New Square Ft of Living Space
59	$300	cost per square foot to build
60	$2,500,002	Total Cash Outlay
61
62	Result
63	School now has EIGHT 2 bedroom, income producing units of 925 sqft each
64
65	$2,000	Staff 1
66	$2,000	Staff 2
67	$2,000	Staff 3
68	$2,000	Staff 4
69	$2,000	Staff 5
70	$2,000	Staff 6
71	$2,000	Staff 7
72	$2,000	Staff 8
73
74	$16,000	Monthly INCOME for School			$2,500,000	Paid back after upkeep in ~15 years
75	$192,000	Annual INCOME for School
76
77	Not enough space on Campus? Find a piece of land nearby.
78	Not enough water meter bandwidth - buy the next available water meter for $350k and/or supplement with a well.
79	Still not enough water - install catchment systems for all field irrigation
80
81	Analysis: 8 purpose built homes, income from renters that eventually pays back the initial expense.
82
83
84	350 Lauff Ranch Road Purchase - $2.25 million
85
86	1.55 acres
87	Structures	Sq Ft	Beds	Could be	Added Cost	Cost Split	Cash Down	Monthly Cost
88	Home 1	1500	2br	3/1	30k	40%	$290,000	$4,475
89	Home 2	1000	1 br	2/1	20k	25%	$181,250	$2,797
90	Home 3	1000	1 br	2/1	20k	20%	$145,000	$2,238
91	Home 4	700	1 br	1/1	15k	15%	$108,750	$1,678
92
93	Pool	Well
94	Lanscaped	Near School
95
96	Sales Price	2,250,000		Monthly	Annually
97	Cash Down	725,000		-	-
98	Loan at 5%	1,500,000		$8,000	$96,000
99	Property Tax		1.20%	$2,250	$27,000
100	Insurance		0.50%	$938	$11,250