Publication number: ELQ-17001-1
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Real-Estate Investment Excel Calculator
This tool will help newcomers to real-estate investment evaluate and analyse their potential real-estate investments.
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This spreadsheet is an essential tool for anyone getting involved in real-estate investment.
This Excel Tool is broken down into five simple steps, making it incredibly easy to use and follow. These steps are: Finding the Net Operating Income, finding the Cap Rate, calculating appreciation 5 years past and 5 years future, financing and "cashflow", followed by the discounted cashflow, net present value and the net rate of return.
The first step of this tool will help you to calculate the overall profit that a property could generate, accounting for the total rent received and all of the possible fees to be paid. This will help you to calculate a yearly profit level for each individual property.
The second step will allow you to calculate and estimate the potential income of a property relative to its price. The tool will show you how you can calculate the cap rate for each of your properties, and show you what kind of numbers you should be looking for in your property investment.
The third step will help you identify potential real-estate investments that could be hugely profitable. Teddy suggests calculating the appreciation of a property over the past 5 years and using this, estimate its potential appreciation over the next five years. He demonstrates how you can find out a property's appreciation over the past 5 years and then how it can be applied to its current price to estimate its future appreciation. This process is absolutely essential in real estate property investment as it allows you to identify properties that could have huge potential.
The fourth step of this template will help you to plan the financing of your property investments. This will allow you to estimate what % of a property's price you can put down and what % of the property's price you will need to take out as a loan. This will allow you to calculate further expenses of your property's based on the monthly repayments of your loans. This step will also give you the chance to calculate the cashflow of your property. Teddy also demonstrates several other "fancy and useful metrics", such as the cash-on-cash return, operating expense ratio and debt coverage ratio. Teddy explains all of these different metrics and shows how they can be calculated and applied to your investments.
The final step of this tool will allow you to fully understand discounted cash flow, net present value and the internal rate of return. Through the input of your own information and data and information regarding your real-estate investment, this tool will calculate your DCF, NPV and IRR and your overall discount rate.
This tool is incredibly useful for those interested in real-estate investment. It will allow you to project and estimate the outcomes of different property investments based on several different factors. Therefore, it will allow you to establish which properties could be worth investment. Each step also comes with an incredibly simple explanation of what it is and how it can be used to help your investments, making this an essential for newcomers to the property market.
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1 Excel Spreadsheet
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