The Forecasts Tab is where the magic happens. Most of the spreadsheet calculations are made in this tab, which will source all the other tabs. This tab is split into 5 sections:
Operating Cash Flow
This section calculates your annual unlevered cash flow based on the operating assumptions filed in the Dashboard tab previously. Starting with total revenue, the spreadsheet deduces all operating costs to obtain Net Operating Income (NOI), then deducing capex and purchase / sale items to obtain cash flow. Note the distinction between unlevered cash flow and levered cash flow:
Financing Cash Flow
This section calculates levered cash flow be deducing principal repayment, interest expense and loan insurance (if any). This annual figure gives you the real cash flow produced by the property each year. Note that the information presented in this section is sourced from the Debt tab.
This section calculates key financial ratios, both on a unlevered and levered basis, including:
This section tracks your property value over the years, using either the appreciation method or cap rate method (as selected in the Dashboard article). It also calculates debt ratios such as:
For more information about financial ratios, click here.
This section tracks certain financial ratios over time, including:
The spreadsheet also calculates what is called “Total Return” for illustrative purpose. Total Return takes into account all sources of return generated each year, including cash flow, debt principal repayment and implied property appreciation. Although this ratio usually results in high return on cash invested, it is based on simplistic calculations that don’t consider the time value of money and therefore overestimate real return, so use it with caution and do not base your investment strategy upon this ratio only.
Terms & Conditions
© 2021 RealEstateSpreadsheets.com – All rights reserved.