Homeowner · Parker, TX · Member since 2015 · 62 posts · 9 votes
Are there any good spreadsheets on BP that will take my numbers and help me get to a maximum offer amount? I want a specific cash flow from the rental and a minimum cash on cash ROI based on my financing.
Or maybe one of the calculators can do this but I don't know how to use it?
@Tony Hernandezit sounds like you need to be somewhat proficient with Excel to create a spreadsheet. You need to take a typical spreadsheet that shows income less expenses and give you the NOI. You then take the NOI and apply a cap rate which gives you a value you would be willing to pay. In your case, you do all that but you need to then add another calculation to insert your desired cash flow or cash on cash return. Honestly that spreadsheet could exist here on BP but I'm not aware of one. If you're getting into RE investing, being able to use excel is one of your greatest assets for deal evaluation. You will be creating spreadsheets for many different calculations and scenarios. Most of them are basic and available online but like you said, you want a specific spreadsheet that may not exist. Best of luck.
I've been through the files a few times and don't recall seeing what you are looking for. I can't say it doesn't exist but if you are pretty good with Excel you could create it. Best of luck to you.
There are ways to do it. The problem is what are you optimizing? Is it just the price? if so, that is really easy to play with. However, I like to play with a number of different assumptions from the rent to the financing, etc. It only takes about 10 minutes.
My $.02 in regards to reinventing the wheel. I am by no means an expert so take my advice with a grain of salt. I think that if you are proficient with excel (not even proficient, literally just capable) I would build the model yourself. Really will comprise only a couple main sections (for lack of a better term). You're looking at income (gross from all sources) less any vacancy and bad debt. Then, net off all operating expenses (not including financing) to get your NOI. This is a great exercise as it gets you thinking about all the types of expenses (ie. will there be a prop. manager, what will you allocate for repairs and maintenance, cap ex, utilities, etc. Are you in a region where snow removal may be necessary? Always going to have taxes and insurance, although perhaps some of these can be downloaded to tenant) By playing/inputting these numbers, and building the spreadsheet yourself it shows exactly how each one affects your bottom line, and therefore your value. Apply a CAP rate to your NOI to estimate value. Buy doing this, you can see how great small amounts in NOI reflect big swings in value. Also drives home relationship between NOI and value. Finally, will make you really analyze your debt service, as what is left over in NOI goes towards the mortgage. By doing it yourself, you are much closer to mastery (I think the final test of mastery is teaching someone else) and I think falls somewhere in line with the the old "catch a man a fish..." lesson. It may be painful at first, but in all honesty, I think you could have something really workable and usable within a couple hours. This is the approach I would advocate, more for the fact it gets you into the weeds. That's where the value is.