Fayanna Hana February 11, 2021 Spreadsheet
Producing an income and expenditure statement using single entry bookkeeping is little more than making two lists of financial transactions. Those lists being one of sales income received from sales invoices or receipts issued to customers and the other of purchase expenditure being from purchase invoices received from suppliers. To record sales income it would not normally be sufficient to simply add up the total of the invoices as such a summation does not leave an audit trail of the items which have been included. A written list of sales invoices does provide an audit trail.
Most investment real estate financial modeling is done in spreadsheets. These can be built for the purpose or, better yet, purchased from a reputable software vendor or consulting firm that specializes in real estate. When building or buying a good real estate investment spreadsheet, there are several critical components you should consider.
Since this is a residential rental apartment building it makes sense to include rental income in your real estate spreadsheet. That‘s obvious. What isn‘t so obvious are things like interest on tenant deposits, subsidies, tax refunds, etc. When you‘re building the spreadsheet you need to estimate when those revenues will arrive, and that relates to the number of tenants, the rental rates you charge, how long the lease term is for each tenant, etc. You also need to assume some late payments, evictions, and vacant units. If you haven‘t invested in the area before this can be a challenge. You can gather data on that by speaking with local real estate agents, lenders, and tax agencies, or subscribe to an industry database that covers the local area.
The first consideration is how clear and accurate the Excel formulas are. The keys here are easy accessibility and logical flow of the formulas. That means they should be either directly coded in the spreadsheet cells or written in an accessible VBA module, open to the user to view and change. Both of these approaches provide the ability to audit and test the formulas without requiring complex actions on the end user‘s part.
So every cell has its own unique address, comprising the letter of the column and the number of the row for example (A1, A2 and so on). You can type numbers, text or formulas into these cells. The formulas make it possible to get the program to do all the time consuming arithmetic for you. One last tip for learning how to figure out spreadsheets is when you are dealing with numbers, it pays to give some thought to how to lay out the spreadsheet. When you type in information, be as careful as possible. Also remember, it is the ability to perform complex calculations that makes spreadsheets such powerful tools. It is worth the effort to learn how to use formulas correctly.
Creating a household budget using the traditional pen‐and‐paper method has almost become the thing of the past. Today, more and more people are turning to more sophisticated ways to make their budgeting tasks a lot faster and easier. One of the best tools in effectively planning a family budget is a household budget spreadsheet software program, which is widely available on the Internet nowadays.