Increasing/Decreasing as % over the latest historical amount (T3/T12 amount in this case)Īs a % of GPR for revenue and as a % of EGI for expenses Other Closing Costs Upon Sale: Includes Deed Tax, legal fees, bank fees, among other miscellaneous items.įor each line item, the model allows three options. They will typically try to make anywhere from $75,000-$100,000 on a smaller deal to $300,000-$400,000 on a larger institutional-sized property. You can learn more about our methodology of calculating residual sale proceeds.īrokerage Commission: Typically, you will hire a broker to sell the property when you are ready to dispose of it. In this example, if we think the cap rate today is 5.50% and will increase at 0.10% annually, in five years, our residual cap rate would be 6.00% (5.50% + 0.10%*5). Increment/Year: How much will the cap rate increase each year? Conservative underwriting should use a residual cap rate at the sale that is higher than the cap rate today. A cap rate today will help determine what the residual cap rate will be upon sale.
Stabilized Cap Rate Today: What do you think the real cap rate is for the property of interest, assuming it is fully stabilized and in good shape from a structural/maintenance standpoint. A conservative assumption would be $50,000. These costs include legal fees, appraisals, inspections, 3rd party reports, among others. The first tab labeled “Summary” is where you are going to input general property information.Įscrow Fees and Closing Costs: These are the miscellaneous fees it will take to close a deal. Understanding the Facets of the Model Summary of Investment I also offer a Free Development Template useful for quickly vetting potential development sites and a Free Rental Property Analysis Template for 1-4 unit properties (SFH to 4-plex).Īt the end of the tutorial, there is a video walking through underwriting for a sample apartment deal. The free apartment template will be very similar to some of the paid products like our Value-Add Model, Development Model and Redevelopment Model. I want you to be comfortable with our product regardless of your Microsoft Excel acumen. The goal is to keep the template clean by cutting out all of the fluff.
I advise you to plug in your email above, download the model, open it up, and follow along in real-time. I have analyzed over 550 multifamily properties over the years and wanted to create a tool to quickly and accurately analyze a deal.
This article is a tutorial that will teach you how to use our free multifamily proforma.