The Numbers
When it comes to the analysis of numbers many people have gotten rich. And I don't mean from real estate. I mean that spreadsheet programs and number crunching analysis gets too much attention from real estate scam artists. And I am mainly referring to costly real estate programs where complex spreadsheets, bar graphs and pie charts display income, expenses, and loan payments in a myriad of ways. There is a great epitaph that works here "Bull** baffles brains". For small multi-family or commercial projects ( under 1 million) the following example will be all that you will need to make a purchase decision. Whether you are buying in Simcoe County ( Barrie, Midland, Innifil or Orillia) this speadsheet appliues to any property.
Please keep in mind this is a simplified version and with the inclusion of joint ventures or complex VTB's this spreadsheet may not suffice. But in my opinion it's all that you need to make a intelligent decision on a simple deal. ( Keep It Simple Stupid)
The financial statement is one of the first things you need to review before inputing information into any spreadsheet analysis. I will review the financial statement at a later session. It is a good idea to learn what to look for in a financial statement to access the properties strengths / weaknesses. I will first go through the basics of spreadsheet analysis by laying out necessary calculations and what they mean to your potential investment before looking a property financial statement. Learn the spreadsheet and you will learn what to look for in the financial statement.
The fully functional real estate analysis spreadsheet below is available for download from our website at www.manainvestments.com
You will notice Instruction/ explanations along the side for your guidance
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QUICK PROPERTY ANALYZER |
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Instructions |
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Property Address: |
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Input amounts into GREY areas only |
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Purchase Price |
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$200,000 |
Enter purchase price |
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Gross Rents |
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Monthly |
Annually |
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Total Rents |
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$2,000 |
$24,000 |
Enter total monthly rents collected |
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Operating Expenses |
% |
Monthly |
Annually |
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Insurance |
4% |
$80 |
$960 |
Enter required % amount (usually 5%) |
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Vacancy |
3% |
$60 |
$720 |
Enter required % amount (depends on area...usually 3%) |
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Maintenance |
5% |
$100 |
$1,200 |
Enter required % amount (usually 5%) |
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Management |
6% |
$120 |
$1,440 |
Enter required % amount (usually 5%) |
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Condo Fees (if applicable) |
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$0 |
$0 |
Enter required $ amount from seller |
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Utilities |
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$320 |
$3,840 |
Enter required $ amount from seller |
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Property Taxes |
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$196 |
$2,352 |
Enter required $ amount from seller |
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Total Operating Income |
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$876 |
$10,512 |
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Net Operating Income |
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$1,124 |
$13,488 |
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Mortgage/Loan Information |
LTV |
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Amount |
LTV = "Loan to Value" |
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1st Mortgage |
75% |
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$150,000 |
Enter % of requested 1st mortgage |
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2nd Mortgage |
10% |
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$20,000 |
Enter % of requested 2nd mortgage |
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Financing |
Rate |
Monthly |
Annually |
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1st Mortgage Payment |
2.00% |
$640 |
$7,683 |
Enter % of expected interest rate for 1st |
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2nd Mortgage Payment |
1.00% |
$76 |
$908 |
Enter % of expected interest rate for 2nd |
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Total Financing Payments |
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$8,591 |
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Debt Service Ratios |
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Debt Service Coverage Ratio (DSCR) |
1.22 |
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Desired minimum amount = 1.10 |
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CAP Rate |
6.74% |
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Desired minimum amount = 6% ( the higher the better) |
Mark Vosylius
(705)-812-1033
Email: mark(at) manainvestments com
Mana Investments - www.manainvestments.com - Educating not specualting. Learn techniques and strategies on real estate investing as well as home ownership in the Orillia, Barrie, Innisfil, Collingwood, Midland areas. We specialize in using RRSP's as a 2nd mortgage for real estate investing as well as joint venture agreements and assignment real estate contracts in Ontario
Homes by The Owner - www.homesbytheowner.ca Helping Investors buy and sell real estate properties that cash flow in Simcoe County and surrounding Oro-medonte areas
The Six Steps to Success - www.sixstepstosuccess.com - Get to your financial goal quicker...Helping you achieve success in goal planning.
;)
;)
