Financial Models

Are rents rising year-over-year? Remember the more a property cash flow, the higher the selling price. So, don’t you want to find out how much a property will be worth in 3-5 years with escalating rent. I sure do. That is why I built this model to examine how rent appreciation effects price and value. Investors use what is called a CAP or Capitalization Rate, to determine how much a property is worth. Take the total Net Operating Income and divide that by a certain percentage. Usually, Multifamily is between a 5% to 7% CAP Rate. Remember a CAP Rate tell you the value of the investment based on an estimated return on the asset. Simply take the NOI and divide it by 5%-7%. This number is one of the metrics appraisers and investor use to determine market value. Use this excel template to model how increasing rents effect the sales price.

Do you have a special place that is right for an Airbnb? If it’s well decorated, and you are willing to put in the work, then Airbnb is a good fit for you. You can 4x your daily rent or ADR (Average Daily Rate) when doing an Airbnb. A condo that might be $50 a night for a long-term renter, may yield $200 a night as an Airbnb. Your need to know what the right numbers are, comparable rates in the vicinity, and how much money you will end up making. Use this excel template if you want to find out how much your place is worth as an Airbnb.

Are you a Real Estate Investor that like to be hands on? Nothing could be closer to the truth and a DIY Fix-and-Flip Investor. If you are willing to get your hands dirty, then finding the right place to fix up might just bring home the bacon. This model is very popular in rising markets, where prices increase dramatically. When you buy a disheveled property at a discount, make sure your upgrades are what buyers are willing to pay for. If not, you may eat the costs of your own upgrade. Find the right construction approach, and fit that number into this financial model. Use this excel template to determine the amount you will make from fixing up a home and selling it at a higher price.

What is BRRRR? Well, it stands for: Buy, Remodel, Rent, Refinance, and Repeat. Perhaps my favorite approach to long term wealth is BRRRR. This model encourages you to fix up a home and rent it out. First, you buy the house and fix it up. Place a renter in the remodeled unit at a higher rent. After that, you refinance and take cash out of the property. With the new cash, you buy another property and repeat the same model. This works really well in an appreciating market when rents are climbing. You can buy and hold, thus gaining increased rent over time, plus watching your price appreciate. Use this excel model to determine how much you will gain from a buy, remodel, and hold strategy.

Did you know that you can qualify for a residential mortgage for fourplex? How great is that? If you’re asking why is this great, then I have an answer for you. Residential mortgages are less expensive. The bank is also able to offer a higher leverage, or loan amount, for your purchase. If the bank puts in more money, then you can put in less.

How much will I make? A common question among real estate investors when they sell. It’s always hard to narrow down to an accurate number. There are no many costs involved when selling an asset or buying one. How do you know the amount with out guessing? Well, for starters, you can use this excel spreadsheet to input your expenses. From there the model will tell you, the approximate amount you will make. While it won’t be exact, it will be very close to the amount. Use this excel template to determine how much you will make or keep after closing the sale.