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Published on: November 23, 2021 at
Rental Property NOI, IRR and NPV Calculations Problem 🏠 | Real Estate Unlevered Pro Forma Excel
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Rental Property NOI, IRR and NPV Calculations Problem 🏠 | Real Estate Unlevered Pro Forma Excel
Today, you'll learn how to calculate the IRR and NPV (with and without a financial calculator, on Excel too) on a rental property. ................ **Mistake: In post editing, I noticed that the holding period was 5 years and that we discounted 6 periods to find the NPV. This is a mistake because the only use for the 6th year NOI is to find the sale price. If the holding period was 5 years, the sale price should have been added to the year 5 NOI (not the year 6 NOI). Alternatively, if we changed the holding period to 6 years, we would have needed to find the year 7 NOI to find the sale price. Then, we would add the sale price to year 6 NOI to find the year 6's cash flow. If this is confusing in any way (don't worry about it lol), don't hesitate to reach out to us in the comment section and we'll be glad to help :) ................ We will look at a unlevered practice problem (no debt, no mortgage), that will touch upon many popular concepts in Real Estate, such as the difference between Potential and Effective Gross Income. We will also examine the NOI formula and explain the Above Line Method. Other concepts that will be touched upon are Vacancies and Credit Losses, Capital Expenditures (CAPX), Operating Expenses (OPEX) and Sales Proceeds. We will also look at cap rates and property valuation. ....................................... Disclaimer. The content in these videos shall not be construed as financial advice. It is your responsibility to verify all information yourself. This is a Youtube video for entertainment/education purposes ONLY. Do not make investment decisions based on our videos. No copyright infringement is intended. Let's get rich. Let's finagle this bagel baby!
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