Diannah Selma June 17, 2020 Spreadsheet
The second component of a good real estate investment spreadsheet is a long cash flow projection period. Property investments are typically very long term ‐‐ from 10 to 20 years on average. In particular, if you are buying real property for long term portfolio holdings, it makes sense to have at least 10 years of monthly or quarterly data, and even up to 30 years. This ensures you capture the entire future cash flows, and enables a much more accurate determination of net present value, internal rate of return, and capitalization factors.
The fourth component to look for in a real estate investment spreadsheet is the ability to input growth rates. Instead of manually keying in different numbers, say for utility costs or rental rates, simply changing a periodic growth rate is much faster and easier. Most good investment models will allow the user to change the important input factors via growth rate variables. This substantially reduces the time to analyze different scenarios and allows the spreadsheet model to be semi‐automated.
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.
Choosing the best budget spreadsheet software can be difficult if you have no idea on what you exactly need. If you don‘t know the exact features you‘re looking for, then the safest bet would be a user‐friendly spreadsheet software that can be easily used even by beginners. Look for this quality in a software program for household budgeting to avoid the hassle of using a very complicated program.
I like using spreadsheets for monetary goals because of the functions I can use. If you are working towards a savings goal, using a word processor or writing them out will require constant updating. With a spreadsheet, you can simple add in how much more you‘ve saved, and if you had the right formulas set up, it will do it all for you. First, set up a different sheet for your long term goals and your short term goals. You can have long term goals and then break them up into short term goals as well as have separate goals. Make the sheet look appealing with bold headers and colors. If you don‘t know how to use excel or other spreadsheet programs, you really only need the basics. Search the net to find out how to get started with spreadsheets.