Real Estate Investment Worksheet

This worksheet is designed to help evaluate potential real estate investments. It calculates the net operating income (NOI), capitalization rate (CAP Rate) and cash on cash return figures for a property. It also estimates the cost of finance to provide a cash flow summary for the investment.

Property

Enter the monthly rental income that the property would generate if it was fully rented (i.e. no vacancies). Then estimate the annual income from other sources (e.g. a coin operated laundry or vending machines). The monthly rental income is multiplied by 12 and added to the other income to calculate the potential gross income for the property.

Next, estimate the running costs for the property. These should include an allowance for vacancies and bad debt (tenants who don't pay their rent). These will vary depending on the expected use. A figure of 15% is reasonable for residential rental property, a seasonal vacation rental could have a vacancy rate as high as 60 or 80%. Make an allowance for repairs and maintenance. The worksheet allows you to calculate and fund a replacement reserve. Enter the estimated costs for items that typically require replacement at 3,5, and 12 year intervals (e.g. carpet, paint, roof or furnace). The worksheet calculates how much money you have to save each year to fund your replacements. Enter annual values for maintenance, utilities, taxes, insurance and management fees.

NOI and CAP Rate

Monthly Rent
Annual Rent
Other Income
Total Gross
Vacancy %
3 Year Replacements
5 Year Replacements
12 Year Replacements
Reserve Fund
Maintenance
Utilities
Property Taxes
Insurance
Management Fees
Net Operating Income
Purchase Price
Down Payment
Closing Costs
Cash on Cash Return
CAP Rate

Enter the purchase price, down payment and closing costs then press the calculate button to generate an analysis. Alternatively, leave the purchase price blank and enter a desired CAP rate to calculate an offer price. The cap rate is calculated as the NOI/Purchase Price * 100. Compare the cap rate for your candidate property with the cap rates for comparable properties to determine whether you are paying too much for the property. A cap rate that is equal to or greater than the cap rate for comparable properties in your market is good.

Cash on cash measures the return on cash invested in property (i.e. the down payment). It shows your effective rate of interest for the cash you are investing in the property.

Finance

The following tables provide an estimate for the finance costs associated with the figures entered above. The 1st loan amount defaults to the purchase price less down payment. If all closing costs are to be included in the financing, change the loan amount to add the closing costs and enter 0 for the Closing Costs amount in the previous section. The property tax and insurance are copied from the payments entered above. The term of the 1st loan is calculated as a 30 year, fixed rate amortizing loan with an interest rate of 8%. You can modify these values as required. The form will automatically recaluate the monthly total when the values change.

1st Loan Amount
Type
Term
Interest Rate
Property Tax (Annual)
Insurance(Annual)
Monthly Prin + Int
Monthly Tax
Monthly Ins
Monthly Total
2nd Loan Amount
Type
Term
Interest Rate
Monthly Prin + Int

The final table shows annual and monthly cash flow summaries based on the calculated NOI and loan payments.

Cash Flow

  Annual Monthly
Net Operating Income
1st Loan
2nd Loan
Cash Flow

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