Real Estate Excel Model: Key Features and Functions Author: Financial-edu.com
When buying a real estate excel model there are numerous critical features to consider. All Excel workbooks aren't created equally and these capabilities can contribute substantial positive aspects to your analysis and produce an impact on your investment choices.
How sophisticated and comprehensive are the inputs to the excel model? As many real estate investors and aspiring investors realize, there are numerous elements that could make or break a real estate deal. Particularly, if you buy property that requires rehabilitation, it is critical that the economic model you're using allows you to enter a complete selection of expenses with sufficient detail to determine each item's effect.
You should also have the ability to class and view earnings and expenditures by category, property type, month, quarter, year, and renter. Most of these should be variable by simply changing the values themselves, or by making use of growth rates. An array of inputs helps during the what if analysis process and creating multiple cases to estimate risk.
In the real estate excel model will there be enough space to input multiple financing arrangements from preliminary deposit to various possible loans or seller financing choices? Even the most basic property investments can have an up-front lump sum of cash which may be financed, a first and second mortgage at different interest and requiring repayment at different times, or different transaction costs. Unless the financial model has this detailed capability it will be challenging to use effectively.
Are taxes and other fees included in the cash flow forecast? Depending how your investment is structured such costs can be very significant detractors from the bottom line cash flows or net income. Since taxes are often paid in big installments but spread over time, they can be challenging to model correctly. There should be a capability in the real esate excel model to vary the timing and size of these items.
As demonstrated here, there are a number of important features to look for when buying a real estate excel model.