Rental Property Investment Model
Originally published: 29/06/2016 08:53
Publication number: ELQ-15112-1
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Rental Property Investment Model

A model for calculating returns on rental properties

This model can be used by investors to calculate the returns on a rental property. It calculates monthly and annual returns and ratios, and a monthly and yearly sensitivity analysis.

Users must define the following key inputs:
- Purchase details
- Monthly rent
- Depreciation
- Operating expenses.

Note: You are welcome to report any errors or any suggestion for improvement. I will earnestly consider all your valuable input

This Best Practice includes
1 Excel Model

Amit Tandon offers you this Best Practice for free!

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Further information

Allows investors to manage a rental property and calculate returns.


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Discussion feed for Rental Property Investment Model

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  • Faiz Abhuani
    Hi there!

    I was pleased to find you amazing rental property investment model on Eloquens.

    There seems to be an error and I'm not sure how to resolve it. It is on the first sheet, the input sheet, A9 reads "downpayment". But this error shows up:

    Unknown range name: 'LEVERAGED_PROPERTY'.

    I can send you a screenshot, I'm sure I'm missing something banal but cannot seem to resolve it.
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    • Amit Tandon
      Hi Faiz, Cell A9 contains the text "Down Payment" whereas cell B9 contains the formula "=IF(leveraged_property,total_initial_cost-loan_amount,total_initial_cost)" which refers to Named ranges. Please ensure that no cells / fields have been deleted or "Names" have not been changed in the "Name Manager" (viz. "leveraged_property"). You may retry by downloading a fresh copy of the model, and it should work fine.

      Amit Tandon
      2arrow_drop_uparrow_drop_downReply reply
      • Faiz Abhuani
        Hi Amit, thanks for the quick response. Yup it was just a problem with the transfer into google sheets, it's totally fine in Excel.

        The project I'm working on is community housing so the end period so I'm assuming that the terminal value should be based on appreciation and not capitalisation. By the way, how do you suggest I account for capitalisation.. should it simply be net revenue as a percentage of the evaluated price or the purchase price (big difference).

        Our terminal year is the year we refinance, so I'm guessing the cost of sale is 0% since there isn't a sale after all...

        How do you recommend we draw the model out for the length of the amortization, I'd like to see what the numbers look like 25 years down the line.

        And last question! I'm really confused about MIRR... I think the purpose of this is to account for the greater value of surplus over debt.. but in our case we will not have any surplus as we are 100% leveraged (our down payment is made up of patient debt that gets paid through our annual surplus). And If we need to incur debt it will be at the same rate as our mortgage rate... Basically not sure what number to punch in there...

        Thank you so much! This model has been so helpful as we are community organizers and don't have the financial expertise to build our projections from scratch. If you want to learn more about our project, check it out here:
        arrow_drop_uparrow_drop_downReply reply
        • Faiz Abhuani
          oops, typo what i meant by end period is that there isn't an end period, our business model is based purely rental and patient low-interest financing. Our objective is to take the property off the market, so we can't account for income from sales, only refinancing to ease debt load after X years, I'm not sure what year that is so I want to build a model that runs throughout the amortization period to be sure that it works.
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          • Faiz Abhuani
            Oh and please let me know if you want to be credited for the model, i would be happy to do so!
            arrow_drop_uparrow_drop_downReply reply
          • Amit Tandon
            Hi Faiz, let me check in detail. Thks
            1arrow_drop_uparrow_drop_downReply reply

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