Excel Real Estate Model: Four Important Features to Consider

When buying an Excel model of real estate, there are several important features to look for. Not all Excel models are created equal, and these features can add significant benefits to your analysis and impact your investment decisions.

How sophisticated and complete are the inputs to the Excel model? As most real estate investors and aspiring investors know, there are a myriad of factors that can make or break a real estate deal. In particular, if you buy a property in need of rehabilitation, it is critical that the financial model you are using allows you to enter a full range of expenses in enough detail to see the impact of each item.

You should also be able to group or view income and expenses by category, unit type, month, quarter, year, and tenant. All of these should be adjustable by simply changing the values ​​themselves or applying growth rates. A wide range of inputs helps during the what-if analysis process and the creation of multiple scenarios to assess risk.

In the real estate excel model, is there enough room to enter multiple financing agreements, from the down payment to several possible mortgages or seller financing options? Even the simplest real estate investments can have an initial lump sum of cash that is possibly financed, a first and second mortgage at different rates and due at different times, and many different transaction fees. Unless the financial model has this detailed capability, it will be difficult to use effectively.

Are taxes and other government or state fees included in the cash flow projections? Depending on how your investment is structured, these can be very important factors for ending cash flows or net income. Since taxes are often paid in a lump sum but allocated over time, it can be difficult to model them correctly. There should be a facility in the real estate excel model to change the timing and magnitude of these items.

As demonstrated above, there are a number of important features to consider when purchasing a real estate Excel model.