Investment memorandum
Sagaponack Shingle House
Sagaponack, Southampton · Shingle-style house on 1.6 acres · $6,200,000
Recommendation
Balanced: income and growth.
6.3% a year over 10 years (3.1% after tax), with $11,892 a month to carry from year one. As a home: renting an equivalent home is about $12,583 a month cheaper; owning wins only if values grow faster than 4.4% a year.
Confidence: Moderate. Base case: 6.35% rate, 25% deposit, 10-year hold.
- Net yield
- 3.3%
- Cash on cash
- -7.6%
- IRR
- 6.3%
- IRR after tax
- 3.1%
- Total return
- 106%
- Cash in
- $1.87m
The property
Cedar shingle, a heated gunite pool and a pool house, set between farm fields and a quarter mile from the ocean. Rents Memorial Day to Labor Day.
Provenance
On land farmed by the same family from 1890 to 1998. The house was designed by a Bridgehampton architect in the manner of McKim, Mead & White's 1880s cottages.
Risks we weighed
Rates a point higher, a month more vacancy and values two points lower take the ten-year IRR to -3.9%. Flood exposure is minimal.
This memo is live. Its figures update as rates and comparables do. Model your own properties the same way.
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