CEO @ Prop Data IQ | Save time and increase your returns through feasibility analysis and financial modelling | Book a 1:1 if you want to outsource your feasibility analysis ↓
An entire commercial property degree fits in a single spreadsheet. Comment for the Excel. 7 topics 1. Building design and massing Enter in the site dimensions and the planning requirements like: - Maximum height - Floor space ratio (FSR) Add in your setbacks. And you have your gross and net area calculation. 2. Market research The point of this section is: - Justify rents with comparables - Prove up cap rates with recent sales - Understand tenant demand through a location analysis 3. Tenancy schedule This is where all your revenue assumptions go. Commercial properties look at revenue on a tenant by tenant basis. Gross rent - outgoings = net rent Net rent / cap rate = end value 4. Feasibility analysis Once we have quantified all the data we need, it's time to figure out if the project makes money. Main principals: - Programme - Revenue - Costs - Financing - Cash Flow - Waterfall 5. Valuation After we know the project works today as a development, we need to figure out the returns if we hold onto it. Key parts: - Assumptions - Discounted Cash Flow - Outputs (Value as at today) - Cash flow - Returns 6. Scenario analysis It's important to understand the returns of your project given likely future scenarios. Construction costs and interest rates are going up. Make sure you model these scenarios to understand your future equity requirements and you raise that equity now. Two types of scenario analysis: - Sensitivity analysis - Break even analysis 7. Performance summary and outputs This section compares your assumptions vs the comparables. Evaluates the project performance (Revenue - costs = profit) Calculates your IRR (annual profit) And figures out how much your rent needs to fall before you break even (lose your profit) --- Hey! I'm Mitch Hale. In the last 8 years I've helped purchase over $500m of property. If you need a feasibility analysis or any kind of property-related financial modeling, send me a DM.
Mitch Hale would be interested to understand if investors in the last 10 years relied on much bottom up financial modelling or wether their decisions was predominantly based on macro economics i.e. cheap leverage, supply shortages. Also, I noticed that seasoned investors with regional expertise can quickly workout the net operating margins in their head through rule of thumb. With regards to the Excel Model, do you know if your model is more accurate, better audited then online calculators?
I always love getting a peak at how others build their models. Send a copy my way!
Fascinating
Nice Mitch Hale. please, share. TA
Please share
please send me excel file [email protected]
👍 property excel please
CEO @ Prop Data IQ | Save time and increase your returns through feasibility analysis and financial modelling | Book a 1:1 if you want to outsource your feasibility analysis ↓
12moHi guys! Just incase the link wasn't working, I've uploaded it to Kajabi. Link here: https://mitch-hale.mykajabi.com/commercial-template