Please critique my Excel Property Analyzer

[Jonathan H.]

Hello everyone,

My wife and I have been looking at properties for the past couple of days and we had been writing everything down by hand.

I got sick of the disorganization and created an excel sheet to see if properties would cash flow with "X" down for "X" amount of years etc.

However, we were not sure what to include in all the expenses.

This is what we have so far:

Vacancy
Property Management
Insurance
Taxes
Maintenance
Electricity
Water/Sewer
Waste
Capital Expense 5% X Gross rent
Misc

Then I left a few blank spots for things I forgot.

any help appreciated!

All the best

[David Beard]

Replacement reserves is simply what you're "setting aside" from the rental payments to handle the large "capital expenditures" as they happen. 5% of gross rents is a common set-aside % that in most cases will build sufficiently to handle your major 15-20 year items (roof, furnace, water heater, HVAC, boiler, appliances). Using 5% of Net Income will not be sufficient.

Take a look at this Freddie Mac form:

http://www.freddiemac.com/sell/forms/pdf/998.pdf

It is used by appraisers/underwriters to estimate Net Operating Income for a property. It's helpful to see how lenders/appraisers look at it, particularly the "Replacement Reserves" section. You will need to have some idea of costs to replace things, such as $150/square for a tearoff and re-shingle, $600 for a water heater, etc.