Financial Model, Investment, Real Estate, Residential Properties

Cost Projections, Excel, Financial Model, Financial Modeling, Financial Planning, Financial Projections, Investor Cash Flows, Mortgage, Personal Finance, Profitability Analysis, Real Estate Valuation, Scenario Analysis

The procedure requires:
• selecting a target home price and a target rent price for properties of comparable size and location (or the same property);
• replacing default numbers with data tailored to your personal situation for more accurate results.

More specifically, data to be entered include, for the “Buy” scenario:
• Target Home Price
• Buying Closing Costs (% of the home cost)
• Annual Property Tax, Home Insurance, Maintenance (% of home value)
• Annual Property Appreciation %
• Down-payment %
• Mortgage Rate (fixed/variable)
• Mortgage Term (or time horizon, if no mortgage was taken)
• Selling Closing Costs (for the sake of uniform comparison, the sale is assumed at the end of the mortgage term, at the estimated appreciated value)

And for the “Rent” scenario:
• Target Monthly Rent
• Security Deposit
• Renter’s Insurance (% of annual rent)
• Annual Rent Appreciation %

Based on the above, the model calculates the mortgage repayment schedule and value generated during the time horizon for the 2 scenarios, taking into account all costs plus return on the invested liquidity.

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