Buy and Hold evaluation
All,
I've been struggling with getting my mind around all the numbers involved in evaluating a house/multifamily for purchase as a buy/hold. I've spent a lot of time trying to simplify it for myself and understand how each changing variable affects the overall outcome of the deal.
I was able to poll some smart and helpful people in the community and put together the spreadsheet in the link below. I'm posting the link here and I hope that it will help someone else understand their deals better, too.
Summary - This sheet allows you to input the purchase price of the property, and assumes 6% closing cost. You can also pre-load any make-ready expenses (inspections, appraisal fee's, etc). This will show you what your out of pocket costs will be to purchase the property -- the assumption is a commercial loan with a 75% LTV (so you'll be out of pocket 25% of the purchase price, plus the closing). There are also field to input your yearly insurance and tax costs. There are 4 tabs that will figure yearly payments for 4 different loan types (5yr, 10yr, 15yr, 30yr) based on the 75% LTV.
Obviously, you can tweak the percentages (or any other assumptions), but I'd save a 'golden copy' , before you start modifying it too much.
All of this info is calculated to show you what your yearly cashflow will be - based on your rent, debt service, vacancy/repair percentage.
Download it and look at it - I'll answer any questions I can and I hope this helps some of you.
LGF Group Evaluation Spreadsheet
Offered as an educational aid - no warranties express or implied, etc, etc, etc