Using ChatGPT to Create Excel Logic #2 – Annual to Monthly Growth
Another post in a growing series on how to use ChatGPT in commercial real estate. In our real estate financial modeling Accelerator program we have a Q&A. Members of the Accelerator ask the A.CRE team questions, and we provide answers. Depending on the complexity/nature of the question, either Arturo, Emilio, Kyle, Michael, or I respond.
We recently received a question regarding how to write a formula such that rent growth would grow on a monthly basis, driven by some annual rent growth input. And while this is logic I’ve used in my models before, it was not a formula that I have memorized. I also couldn’t recall which models I’d included this logic in.
And so, I thought this would be a great use case for ChatGPT to help me develop that logic anew but in a much quicker way. In this video tutorial, I show you how I used ChatGPT to quickly build a formula and then share that formula as a response to the Accelerator question.
- Not yet a member of our real estate financial modeling Accelerator program? Consider joining today.
The output created from ChatGPT during a back-and-forth exercise to create Excel logic to convert annual to monthly growth cash flows.
What is GPT, ChatGPT, and OpenAI?
Given that this is another blog post in the series, I assume you’re well aware of what ChatGPT and natural language models are. I also assume you’re familiar with its creator, OpenAI and the significant advances in artificial intelligence that is currently underway.
Therefore, I won’t rehash in this post what GPT, ChatGPT, or OpenAI are. However, if these concepts are new (or you’re looking to learn more) you might check out our Using AI in Real Estate guide.
Using GPT in Commercial Real Estate – Converting Annual to Monthly Growth
I continue to explore other use cases for natural language models like ChatGPT and Google Bard in commercial real estate. In this video, I show you one such use case wherein I find the logic to convert annual growth to monthly growth cash flows. Note that ChatGPT relies on a plugin called Wolfram – a math and computation tool – to provide an accurate response in this case.
- Click here to read the entire ChatGPT conversation that this video is based on.
Frequently Asked Questions about Using ChatGPT to Convert Annual to Monthly Growth in Excel
What was the purpose of using ChatGPT in this scenario?
The purpose was to generate Excel logic that converts annual rent growth into monthly growth. As Spencer explains, “this was logic I’ve used in my models before,” but he didn’t have the formula memorized and saw it as a good opportunity to quickly regenerate it using ChatGPT.
Why is converting annual to monthly growth important in real estate modeling?
Monthly modeling is often more precise than annual modeling, particularly in pro formas and lease analysis. Rent usually accrues monthly, so converting annual growth inputs to monthly ensures more accurate financial projections.
What formula was generated to convert annual growth to monthly growth?
While the post doesn’t quote the exact formula, it implies that ChatGPT produced a monthly growth rate based on the equation:
Monthly Rate = (1 + Annual Rate)^(1/12) – 1,
which is a standard approach for compounding annual growth over 12 months.
What tools did ChatGPT use to assist with the math?
ChatGPT used a plugin called Wolfram, which specializes in math and computational queries, to ensure that the compound growth logic was correct and accurate.
Was ChatGPT’s response immediately correct?
The post suggests that the response required some back-and-forth, noting it was a “back-and-forth exercise to create Excel logic.” This shows the importance of iterative prompting when using AI for technical modeling.
Can this approach be applied to other Excel logic in real estate?
Yes. The post is part of a larger series on using ChatGPT in commercial real estate. It shows how AI can act as an analyst by quickly generating logic, formulas, or structures for various real estate modeling scenarios.
What caution should users take when using ChatGPT in Excel modeling?
Users should review and test formulas generated by ChatGPT, especially for financial modeling. The blog emphasizes, “ChatGPT… occasionally hallucinates,” meaning it might produce incorrect or non-existent logic that needs to be double-checked.
How is this use of AI impacting the role of analysts?
Spencer notes, “While human intuition isn’t going away anytime soon, the real estate analyst role is going to change dramatically.” AI will improve the speed and accuracy of sourcing and organizing information—tasks that take up most of an analyst’s time.
