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Free pro forma template excel for Supervision

hello this is Ike Hoffman with tactical real estate solutions and they I'm gonna walk you through how to use my free multifamily valuation model if you're seeing this video on YouTube you can download the tool from tactical re Escom the link is below two things with this model the page you're looking at this author tab I would really appreciate if you left that intact see this and links back to my site and it helps me stay in touch with users so if you're sharing it with co-workers friends other people in the industry it will allow them to know where it's coming from they can check out my site see the content that's being published and more importantly know if there's bug fixes or improvements to this model the other thing I ask is please don't sell the model I think it's pretty self-explanatory why oh look that wouldn't want that to happen but with that that's really it and it's free to use and I like to think that it's simple sophisticated and hopefully helps you streamline your multifamily analysis you know this is for more experienced investors I'm not gonna spend a lot of time diving into the lingo the terminology you know I expect that you know what cap rates are what return like a cash on cash or an IRR is and financing terms things along those lines there's other great resources out there if you're just getting started but I'm really trying to create a tool for people that have some experience coding real estate and just want to streamline and analyze deals vet deals more efficiently and that's where I see my financial models filling a niche so with that being said let's get started I'm gonna look at a scenario today where we're looking at the financial feasibility of a 24 unit apartment building so the first thing we need to do is check out our summary tab before we get started in putting the model I really expect this to be an exercise that's going to take you 20 to 25 minutes once you have some financials and a rent roll from a broker or for Mana Party apartment owner if the video might take a little longer than because I need to explain some things but 20 minutes plus or minus is really the target timeframe this you take once you get used to the model and are firing at all cylinders so the first thing we need to fill out is just some general property information I'm not gonna do that right now it has no effect on the actual numbers that we're going to be in the returns that were gonna be looking at here the short-term but just the general property information is something that you can fill out on your own when you're doing this but to save time I'm not going to a lot of stuff on this tab will populate once assumptions are filled out throughout the model so it's there's gonna be a lot of errors at this point and that's okay as you're seeing here there are black cells and brown cells brown cells are the ones that you need to fill out black cells are either formulas or just hard-coded items that you don't need to worry about so the first thing we need to do is just fill out some closing slash residual assumptions so when you're buying this property we need to put in what those closing escrow cost things like inspections some legal fees and appraisals would be so I'm just gonna put in forty five thousand dollars for no particular reason this would be something I would adjust as I'm getting more serious about a deal and fine-tuning my underwriting so then the next two assumptions have to do with the residual and specifically the residual proceeds you'll get once you go sell this apartment one day so the stabilized cap rate today I'm gonna put in five point five percent be reasonable think about it in terms of okay if this property hit the market and you know it was a decently good shape not a lot of deferred maintenance what would the true cap rate be and then the increment per year is gonna determine how much that cap rate will increase by each year that you hold the asset so I'm gonna put in ten basis points which is a tenth of a percent so in this example of you own this property for one year the residual cap rate that is used to determine the sale proceeds would be five point five plus ten basis points or five point six percent now if you held it for five years the residual cap rate would be six percent so the highly increment is per year the more conservative your underwriters being you really don't want to just depend on that residual value to make the deal work so be cognizant of that I'm gonna enter in a brokerage Commission when you go sell it you know typically on a smaller deal Roker might want ya between 75 grand and 125 grand so I'm just gonna put in three and a half percent here and then other closing coster's typically like deep tax and other miscellaneous items legal fees stuff like that I'm just going to put in a half of a percent so the total the total sale cost will be four percent of that residual value we can put in some financing terms too so I'm just gonna sit call the loan bank loan will target an LTV of 70% the loan amount doesn't popular right now because we don't have a price for the that we're willing to pay for the apartment building interest rate I'll use fourth quarter a 10-year term 30-year amortization in a loan cost of one percent of the outstanding outstanding loan balance and then interest only I'll do 12 months if you were assuming loan you can click yes here you type in all the pertinent loan information just like you would with a new loan you just have to specify which month you're assuming that financing and then the model will figure out what what your monthly cash outflows would be for interests principle and the outstanding loan balance as well the model supports two financing pieces so if you did have a second loan like maybe you were assuming alone and you wanted to put that in the into the first loan slot and then you wanted to enter in a supplemental in a second you're more welcome to do that another common scenario might be is if you have a contract for deed you're getting seller financing and then you want to tack on an additional supplemental so I'm only going to be using one piece of financing it's going we're gonna assume it's a free and clear loan so I'm gonna elect no here right above there's some pricing stuff this really doesn't do much for us right now so I'll come back and revisit us once we have our model populated but you essentially can adjust your hold period and they'll tell you how the levered IRR in equity will change no based on the other something's are going to be inputting here shortly so the next thing we need to do is fill out our unit mix I just have some like general generic floor plans in there right now we're gonna pretend that we received a red roll from a broker you know in a PDF I am put it into Excel in this blue box here I did some calculations at the bottom just to figure out obviously I counted all the units is 24 units calculated the average square foot average rents so that's what we need to input into this unit mix so I'm gonna go ahead and delete these rows that I don't need it's just going to be a one-bedroom in a two-bedroom with larger deals that are more institutional nature there might be a lot of floor plans that have different codes this deal obviously it's not that sophisticated I'm just going to delete that it's not necessary there are 12 one-bedroom units in this particular deal in 12 two bedrooms you can see the pie charts below starting to populate square footage if we go back and check the square footage for the ones is 675 and for the twos it's 825 I'm going to enter that in and then we just need the average rents which are 840 and 942 840 and 942 so our unit makes this complete you can see 24 12 units average square footage 750 18,000 total square feet the average blend around is 891 remember square foot total monthly rent then the last thing we need to do it looked like there were two making units use two flames here so I'm gonna go ahead and say that out of the twenty forty minutes there's 22 occupied units so that properly the property is currently 8% vacant so if that inputted now we can move along to the financials in this particular example if I scroll over a little to the right in this gray box we received a t12 and then we received three months of monthly financials that constitute the t3 amount but we don't have as you can see in my model we can go back two years so 2017 and 2018 information typically on smaller properties the financial would be less sophisticated and you're kind of lucky to even get a t12 at all so we'll just consider ourselves fortunate in this situation and I'm just gonna go ahead and hide these two columns because they're not necessary we don't have data for them anyways and then we can start I'm gonna make this smaller here this and we can start inputting our financials so we have t12 information you know you can you can see there's a lot of lot of brown line items here that we're gonna be adjusting I like to include more then that's more than that more than what will be necessary because you can always just delete rows for stuff you don't need I'm gonna show you how to do that but I'm just going to get entering in all this information so 244,000 the financials are so gross collections so there's no like vacancy loss or loss the lease looks like there's some specials which would be concessions that the negative numbers that you need to input they'll be like us orange tint so that's just to know that those are things that you can adjust vacancy loss like I said there's no vacancy loss and then bad debt - twenty four hundred and then there was some laundry income five and then just other miscellaneous income of twenty three forty four and then if we go down to the expense part of it we can enter those things in as well so 1584 admin 234 from marketing there's no management fee that's something that we're gonna have to add in our pro forma no asset management there's no payroll either so water and sewer nine ninety six fifty trash contract is 8,700 gas for heat is eleven thousand forty and an electricity for common areas is seventeen eighty nine RM is just a combination of you know typical repairs contracted services / supplies things of that nature I just grouped it all together 34 671 because turnover and contract services are all in arnhem I'm just going to delete those for now you know on a more sophisticated deal that had more detailed financials I would break those out so I have a good idea of how the RM is truly allocated but this is just meant to be a quick exercise insurance twelve thousand four hundred ninety nine and then apartment real estate tax is thirty two for eighteen all right so I'm gonna go ahead and start deleting rows that I don't need all this other stuff I'm gonna leave payroll and management fee because I will have an assumption for those in the pro forma then up on the revenue side I'm gonna leave water sewer trash current ownership is not billing back for that but that's an upside opportunity in this particular case cops in the area are billing back for water sewer trash so that's something I'm gonna try to phase in here and my performance see all the numbers would look if I'm able to do that and then I'm also gonna leave garage parking there's 20 garage spaces for these 24 apartment units and the residents that are utilizing Gravatt is currently get them for free then I'm going to delete employee discounts on model units so there's some upside in this deal which is exciting now now this model is shrunk a little bit and is a little easier to digest and manage so now I'm going to enter in the T 3 revenue items so I'm going to go back reference the financials here off to the right revenue 61 763 concessions negative 200 bad debt negative 363 laundry income 1455 and other Oh looks like a deleted my other I'm gonna go back sorry accidently deleted my other income item there something that bear with me for one second hairs I get everything updated correct all right sorry about that 61 7 63 - 200 - 360 Foofa Ben that laundry is going to be 1455 other income will be five point five for a total of 63 180 I'm just gonna highlight over this and confirm 63 180 okay so we entered everything in correctly now I'm gonna hide hide this column so I when you see the annual last two three amounts it's highlighted pink just so you know that it might look a little more intuitive I'm gonna go ahead and make this t12 text white so I know that it's imported correctly and I don't need to worry about it anymore so you it breaks down the t3 t12 metrics the model will break it down by per unit percentage of GPR for revenue items or percentage of egi for expense items and then on a per-square-foot basis I'm not a big per square foot guy so I'm actually gonna hide that column I'm gonna make the model take up the whole screen here in the green columns this is showing your trends year-over-year trends because we did have 2017 or 2018 data the transformed 17 to 18 or 18 to t12 are blank so we can go ahead and hide those they don't tell us anything at all and then we have then we transition into our forecast of the year one assumptions but we haven't made any assumptions yet so to do that we just need to slide over to the right a little bit and this is where we're gonna start making our assumptions for the pro forma so one thing I learned over my many years analyzing real estate is that many investors during the initial years of a pro forma they like to be pinpoint accurate you know they don't want to just do three percent ranked growth on revenue three percent expense girls and call it a day they really like to plan and look at the outside of the deal and figure out how much cash flow will be coming in those initial years and you know when they can and how fast they could phase in something like parking parking revenue or a rub system or renovations whatever the case might be so I give you three options for years 1 & 2 underwriting you can either underwrite based off of a growth percentage over historical so for example in this first column you know if you wanted to grow laundry income by 3% over the T 3 amounts you just type in a 3% in this column right here if you wanted to do your laundry if you wanted to underwrite your laundry as a percentage of total GPR you would enter in your assumption here or if you wanted to do it on a per unit basis which I do a lot of underwriting based off of per unit cuz that's what I'm comfortable with that would be reserved for the third column so just to give you an example how this might look let's just walk through all these assumptions so the girls potential rent is a little different than all the other assumptions I'm gonna put in five percent you know I think there's right significant rent growth outside at this property but this first assumption is going to take get the current retro annualized and increase that at five percent so you can see here the FY one rent assumption we plug in five percent is two hundred sixty nine thousand four thirty eight so what this assumption is doing is it's just going to the unit mix it's grabbing the total monthly potential lab it's analyzing it multiply it by twelve essentially and then growing it at 5% and then you can see it's 269 for thirty-eight so that matches out so now you know most in most of these smaller properties and now we're going to gain or loss release you're gonna see that on bigger deals that are more institutional in nature I'm just gonna delete that real for now it's not necessary concessions so there were a small amount of concessions in the trailing numbers you can see those on an annualized basis it was negative $800 so I'm just gonna type in minus 100% and cut those out should be fairly easy to do for vacancy I'm gonna do an assumption that's 5% of GPR sorry I need to actually type in negative for your negative assumptions so negative 5% of vpr again that's this middle column if you want to underwrite it under write your assumptions like that and then for bad debt I was like to keep some bad debt buffer people not paying rent I'm gonna do 25 basis points as a percentage of GPR that's 674 dollars a year and then we get to garage parking there's currently not any parking income and if the comps in the area for detached garages they're charging 40 dollars per month so there's 24 units and I'm gonna try to phase that in over two years so hopefully when it's all said and done after one year I'll have at least 12 units which is 50% of my unit mixed paying that $40 so I'm gonna say 12 units times $40 per month times 12 because we want the annual per unit and then divided by the unit the total number of units which is $240 a month over translate to five thousand seven hundred and sixty dollars a year for laundry I'm just gonna do a three percent increase over T three amounts keep that simple and then water swimming trash I'm gonna follow a similar logic to parking I think I can charge five dollars a month for trash and thirty dollars a month for water sugar but I'm gonna face that again in over two years so I'm just gonna take for trash it's 12 units fifty percent of the unit makes times five dollars times 12 months divided by twenty four units and then for water sewer it's going to be twelve units times thirty dollars times twelve months divided by the unit mix and that's one hundred and eighty dollars per unit and then the other income miscellaneous fees and other income just even grow 3% over T three amounts most of my expenses I'm just going to do three percent over traveling 12 months in my opinion the expenses of a reasonable repairs and maintenance hi but I think it's better to run a conservative model at this point management fee I'm going to run as a percentage of egi so I'm going to type in 5% in this middle column and then payroll there is no payroll right and I might not need to allocate an entire employee to this property but I'm gonna assume that you know if I bought this place I'll have a caretaker that could handle some turns handle some some shoveling it snow removal stuff vacuuming common areas things of those nature no I'm gonna underwrite a $500 rent premium so they're gonna get $500 a month so I'm gonna analyze that and then I'm gonna divide it by the total number of units so that's 250 a unit of payroll and then we get to these gray cells and I haven't explained them yet these gray cells are being calculated elsewhere so in utilities case and utility reimbursements you're gonna underwrite each utility separately and then what's showing up in the gray is just the aggregate total of all of those so for example I'm gonna go on my route to utilities expenses at 3% and you can see then utilities a hold and increase at 3% its eleven point seven one percent of egi or one thousand three hundred thirty-eight dollars per unit so RM insurance I'm gonna grow my three percent as well apartment taxes have shown in air right now we have a separate tab dedicated that that we'll get to shortly and then reserves I'm just gonna set at three hundred dollars per unit reserves will stay at three hundred dollars per unit for the rest of the hold investment period from years 1 all the way through time so you don't need to you don't need to enter that in anywhere else and just there is a key below so anything that's kind of this beige color those are assumptions that you need to make but anything that's gray the assumption is made elsewhere and it was just being summarized in the cells so once we have year 1 complete we can take a look and really compare how forecasts of year 1 books do the historical financials just to make this easier I'm gonna go hide some of these other metrics and just show you know so we can see T 3 T 12 right next up I want you can see the egi increases 8.5 2 percent we can see expensives are still showing an error because we haven't inputted real estate taxes yet but we'll come back and analyze that once we've completed a real estate tax assumptions but really there's a lot of columns here and there's a lot of good data but I know a lot of people you know it might be a little overkill like I said I don't really like the per square foot stuff it doesn't do a lot for me but other people live and breathe that especially people that are used to developing properties so it's totally up to you and how you want to look at this just to make it simple for now let's let's hide everything except just our girls annualized numbers so we have T 3 T 12 sorry then T 3 T 12 for historical then we once we get into the proform it's just FY 1 and you can just look at stuff side by side and there's a lot less fluff so now we need to make our year two assumptions I'm gonna do another year of 5% Iraq growth concessions since we already decrease them to zero we don't need we can just leave a blank they'll be 0 in the model and then continue to run vacancy at 5% of GPR and I'm gonna keep bad debt as 25 basis points of GPR so garage parking remember are phasing this in over two years I can literally just take this assumption and multiply it by two not will be fully phased them and I'll be given four hundred and eighty dollars per unit per year laundry I'm going to continue to increase at three percent annually and then I'm gonna multiply the lottery supertrash back to you because it's going to be 100 percent phase then there's only 50 percent phase then after year one so you can see total I'm getting four hundred and twenty two per unit in utility reimbursement and then pretty much across the board here I'm gonna just grill all my expenses at three percent I'll continue to run management at five percent of eg I bring this down to spread it out a little bit and then find it once we get to year three you lose a lot of the flexibility you can only make an escalator assumption so for example I going to type in records of three percent forecast at year three all these other cells from here's 4 through 11 are linked to but you can overwrite it so if you thought for some reason you're gonna have 5% of our growth in your 10 or 6% in your 9 you can you're more welcoming up over right I just think it 2 FY 3 because most people holding on the assumptions early on in years wanting to and then they'll just use more of a generic escalator in future here's somebody I can see I'm going to continue to run a 5% of GPR I'm going to hold bad dad steady at 0.25 percent that will go all the way through just going to grow all my revenue items at 3% if you leave these cells blank it will show up as you're on the Performa so just make sure that you're you're cognizant of that all expenses to be percent as well and then we're good so then if you scroll over to the right you'll have your all of your cash flows to Noi and see it looks like other income is blank so I must have missed yo see I forgot to grow it here too so then your three words it's growing zero a 3% which is zero so I always make sure you scroll over make sure everything looks good taxes are still firing in air so that's our next step and so for real estate taxes the biggest thing that we're trying to capture here is if there's reassessment risk I've analyzed deals in eight different states and the tax calendar works differently in every single one of them so it's really hard to come with a custom real estate tax page for your state this is some of the further customization I offer around a consulting basis so so if you lived in Minnesota or Florida or Washington or whatever the case might be if I can create a tax tool that is tailored to your state in your tax calendar but in this model I really wanted to create something that works for everybody and the biggest things I were trying to capture is is when taxes will reassess how much and how much reassessment liability there is right because if you're paying significantly above where the property is assessed at there's going to be a lot of real estate tax exposure likely in the future for you so that's what we're trying to get here it's not gonna be pinpoint accurate unless you want further customization but it is enough to be dangerous so in Minnesota the taxes would reassess in year two that's when you'd start to see the increase in taxes payable each year and just to play it safe I'm gonna say that this property reassess is at 100% of the sales value and then I'm gonna type in for real estate tax increases for the non assess the assessment year is 2% so the property is not reassessing it's just gonna be a two percent increase every single year all right so now I need to go back to our assumptions page and you can see that I got some tax information offline in Minnesota taxes are paid in a year a Reaver so in 2019 right now but for 2019 taxes apart based off of the 2018 assessment so for the current year taxes I need to first specify that the assessment year is 2018 taxes payable is 2019 the assessment I'm out was 1 million six hundred eighty thousand 1 million six hundred and eighty thousand the taxes payable 31 920 the tax rate will calculate automatically in some states there's discounts so they'll offer you three percent off or four percent off if you pay the taxes by a certain date instead of in increments and then if there's a special assessment that this is the cell you would enter that in so the following year taxes will well enter automatically if you know next year's assessment you can enter that here so for example in Minnesota we already know about the 2019 assessments will be and that's gonna determine what the 2000 taxes payable are if you didn't know you can just leave a blake and say what taxes payable if they're proposed you're more than welcome to put that in here or you can just leave a blank in the model will make an assumption for you to dependent on the tax rate that's being calculated this year so we know what the assessment is 1.75 million we still don't really know what the consequences are going to be of this hundred percent reassessment two years after sale because we haven't entered in a price yet so once we enter in the price we're going to pay for this then this table will be a lot more valuable so that's the next step so this is the final tab where you have any inputs you need enter the first thing is the price so we'll say the broker's pricing guidance was 2.5 million all right and then primary financing remember we typed into financing assumptions on the summary tab and in this deal we did have a secondary financing option so we're just gonna say yes for primary financing remove secondary financing is no and then we're gonna put in some working capital this is 24 units we've implemented rubs program do some like cosmetic stuff to hopefully get that 5 percent increase in years 1 & 2 like we had input about the financials tab so I'm gonna say $2,000 per unit or 48 grand and that will just be spent year 1 so you can see that populated right here so now that we have everything input let's kind of work our way backwards so now the real estate tax table is updated you can see because we've assessment increases for point 1 7 percent in 2019 that's what the taxes will increase by as well there's gonna be a big job right because we're it's only assessed at 1.75 if we paid 2.5 million that's gonna create quite a bit of tax liability you can see that it's 42.86 percent and then assessment growth after that will just be 2 percent which is what we stipulated up here the tax rate is just gonna be steady hold steady at 1.9 percent which is current year payable divided by the assessment amount these cells are brown so you can overwrite this if you really want to underwrite conservatively like maybe you increase 1.9 by 5 basis points a year discounts again discounts and special assessments tied to these cells but if you didn't want to put in a custom discount each year or a special and you thought the special assessment would be done after 3 years you know this is where you can make those adjustments you're more and welcome to override formulas if necessary so then we get back to our financials now that we have real estate tax I don't even see it's 32,000 to 50 in year 1 and that's gonna take a pretty significant jump the property reassessment is factored into the taxes payable number so if we keep moving backwards and go back to the summary tab now what's interesting is I have this pricing so it summarizes 2.5 billion that would translate to one hundred and four thousand 167 per unit or 139 collett per square foot so here you can you can adjust your whole period and you can see how it affects the IRR and the equity multiple equity multiple so the longer you hold it the higher the equity multiple will be we also have some cap rates a student investors will always look at this tax adjusted cap rate remember real estate taxes are gonna jump like 42 percent once the reassessment happens so you know I'm teak 3 to 12 numbers paying two and a half million as a 5 3 cap which may seem reasonable in your market but remember we need to add in a lot of expenses that the current ownership was not former ship group was not accounting for and then there's going to be that massive real estate tax liability that when you factor that in the Noi will decrease significantly that's truly a four six six cap tax adjusted so for example here in Minneapolis that seems insane maybe for a classy value-added product but oftentimes the cap rate dips into the floors because of this tax liability and just because some of the upside that these investment groups will see so let's go back to the valuation tab and just scroll over and summarize some of these metrics here so it summarizes the price above the per unit the per square foot and then it has all these cap rates and I used some conditional formatting so you can see with you know the t 12 and the T 3 to 12 you can see how much the real estate taxes will jump adjust that cap rate and it turns into that dark red just so you're aware that if you're buying to deal significantly above the assessed value there's some risk there it's gonna summarize the capital assumption it's gonna summarize some of these closing costs these escrow closing cost needs of your currency have 45,000 looks better and then our cap rate assumption remember it's five and a half percent with one percent increments each year if we scroll down in the model you can see where that's happening so we're jumping up by 10 basis points each year that's affecting the residual value so for example the residual value in year 5 is taking the NOI or 6 dividing it by the 6% residual cap and then we determine all of our closing costs which is this brokerage Commission and other closing costs which is so this negative 190,000 would be the 4 percent times the residual value and then our loan is being tracked as well and that loan paid out pay down will determine the proceeds at sell so then we get into the some of the other metrics we have an all-cash ir a leveraged I are in an equity multiple the all-cash IRR is an IR that ignores the debt it be your returns if you just wrote a check for this deal straight cash no financing and I always like to include all cash in that tricks because it will help you distinguish if you're getting a nice boost from your debt hey deck can be risky debt can leverage to me great but it can also sink the ship so make sure that you're always comparing your leveraged returns the hell would look with Oh any debt so once you get down to the cash on cash returns again I do the same thing I compare it to an all cash return meaning there's no debt if you're just paid 100% in cash you can see early on in the deal in years 2 3 & 4 the cash on cash return early in the deal which is factoring in the leverage it's actually less than your all cash so these first few years that that's actually not a creative your most deals that brokers are selling these days at least in my market this is pretty much commonplace for the first 3 years 4 years or so until the ownership group can grow revenues enough where the debt actually becomes a credo but I would be a little worrisome you know if you're taking out this dad and you hit a snag and you're not able to grow to rents as much as you projected so for this deal you know I would 2.5 I would maybe see what the returns would look like at 2.25 million so decreased 3 out of zero so decrease the the price by 250 grand now the cap rates seem a lot more reasonable even tax adjusted you know it's like mid fives which feels a lot better yeah the the levered IRR which is a metric I like it's boosted a little bit year seven it's in the mid-teens which feels a lot better the equitable equity multiples get close to two and a half on the project and the cash on cash returns are larger than the arc cash returns every year so that would mean that this deal is producing enough cash flow in its current state at the price point where the leverage is accretive you have powerful leverage here that's gonna help boost the returns of the deal so I would try to I would get a feel from the broker if you know if 2.5 is really real or maybe just put in an offer where you're comfortable the key is to know what you want going in whether it's an IRR a cash on cash return that would satisfy your goals or your investors goals and not budge from that you know if the market wants to pay more leave that to the market to do so I should point out the final tab there's no inputs here it's just it's just the debt stuff so if you're just looking you type in on your debt information on the summary tab this is just where the cash flows remain summarized so if you're wondering how the debt is flowing into the pro forma you can click that little ax on top and it will show you what the debt cash flows are what the principal interest payments are and what the loan path would be in each year now if you're assuming the loan that's this is the table you'd be paying attention to but we're doing 3 clear so this is specifically what is flowing into the model for the current deal so just to wrap up this valuation page is pretty powerful stuff you know you can see whether you're holding the deal for two years or seven years or ten years you can see what the corresponding IRS and equity multiples would be and what those cash on cash returns would be over the hole you can also go to the front of the model and you can just play with different hold periods if you just want it summarized really fast without having to go back to that page type in for here and then you can see the IRR changing and then the cap rates the cap rates are just a you can choose three of the of the six that are listed here just whatever your preferences are you can choose those to be display on the summary page and it's just gonna give you a quick feel for the property and you're not gonna have to be bouncing back and forth between the sheets as much so that really wraps up the tutorial of this financial model again I think once you get used to it it should take you about 20 to 25 minutes the model of property there you know there are some shortcomings here if you're doing on value add a to value a deal where there's upside if you're renovating the units you know I do have paid models that break down the unit mix by the original in the renovated units and you can come up with rental premium specific to each floor plan you can make capital assumptions for each unit type and floor plan and the model does a really good job of just breaking down that renovation rent growth and the capital spend per year and your return on cost and even it's even more powerful because it allows you to alter the timing of your renovation plan whether it takes two years three years four years or how many months the present units will sit vacant when you when you're aggressively renovating them there's no partnership returns in this model I have other paid products that it would flow into partnerships and you can you can experiment with different structures whether it's an IR or waterfall or pari passu or you just want to do a 80/20 split with your equity investors whatever the case might be or a preferred return even and then a split after that I have all that in different models and then the other thing is is just major capital expenditures so whether you're renovating units or there's a significant amount of deferred capital most people syndicating equity will raise that on the front end this model is limited because it any capital items is subtracted from the cash flow so I have other products where you're able to specify how much of the capital whether it's renovations preferred nature to raise from investors and then obviously that's going to have a significant impact on returns whether it's IRR or cash on cash because the basis will be higher going into the vestment if you're raising it on the front end and then just stress test you know this model you more and welcome to plug and play with with the different assumptions but now I always say a more powerful model it's gonna utilize the data and it's gonna utilize the data you've inputted it will have flossy stress them out so you're aware of the best and worst case scenarios without having to alter assumptions on your times and try different rents and different growth strategies and different financing and so some of my other paid products have built-in stress capabilities if that would be something interested you but hey this is my free model it there it truly is meant to be just if you're initially vetting a deal get a quick back in the napkin and understand what's going on and know if you want to pursue it further and I hope it serves that purpose I hope it's clean I hope it it's easy to use and if you have any questions comment below if you're watching this on youtube send me an email direct and I'm always going to be improving these things and fixing bugs and just making it tailoring it to you guys and what you're looking for so so thanks for checking out the video today I hope you enjoyed it and please come download it and let me know what your thoughts are thank you