Sources and Uses Section
Welcome to this video. In this video, I will cover the Sources and Uses input section in the ARGUS Multi-Family model. In a typical investment, sources of capital consist of debt and equity. Uses of capital consist of purchase price and various items.
I am going to input 15 million for purchase price. 800,000 for broker fee. 700,000 for legal expenses. 50,000 for working capital. Mortgage Brokerage Fee is 1.0% of the total debt amount. In fact, I can use a percentage-based expense wherever I want in the Sources and Uses section. Let’s say due diligence fees are 5% of legal fees. I input the 5% here and do the calculation besides it. This is just a demonstration of the great amount of flexibility I have in the Sources and Uses section. I will reenter 80,000 dollars for Due Diligence Cost. Acquisition fee is 1% of purchase price. 100,000 dollars for capital raise fee. 1 million for Capital Expenditure Reserve. These Reserves are basically the funds put aside for the renovation cost.
I am going to go back to the sources now. I will input 10.5 million dollars for senior loan amount, which represents roughly a 63% percent loan to value, and input 1.5 million dollars for mezzanine, with a Loan To Value about 9%. General Partner will put 465,000 dollars in this deal and Limited Partner will contribute 4,185,000 dollars. I will cover the GP and LP dynamics in this model later in the Waterfall section.
Last but not least, I need to check if the Total Sources match the Total Uses. 16.65 million, 16.65 million.
I am all set with Sources and Uses section. Thank you for watching this video.