Two Properties Analyzed at Once

[Anonymous]

7 years, 6 months ago #2790

Is it possible to use the model to acquire the first property for full equity and then use the equity in the first property as collateral in the second property, but then combine everything so that the Cash Flow, Operating Statement, IRR Matrix, and Summary were a roll-up of the two?

[Spencer Burton]

7 years, 6 months ago #3338

The short answer is yes – but the process isn’t especially intuitive since you’d have to use the Development Module even though the investment isn’t a development!

Here’s how you would do it:

1) Turn on the Development Module by setting the ‘Development Length’ (see Summary tab) to the number of months until you acquire the second property.
2) Set the Operations Begin Date (Summary tab) to be equal to the Analysis Start Date.
3) Set the Stabilization Date (Summary tab) to be equal to the date when the second property is acquired – this should be one day following the ‘Development End Date’
4) Go to the S&U tab, set the LTC to 0%, and then hit the ‘Set Construction Loan Amount’ button. The ‘Construction Loan Amount’ may show as some value close to, but not exactly 0 – just ignore this as it’s a rounding error related to how the Macro is written.
5) Go to the Budget tab and in column D, zero out all of the blue font cells. Then, change one of the Budget categories (e.g. Construction Costs) to ‘Acquisition’. Under that newly labeled ‘Acquisitions’ category, rename a line item to ‘Property #1’ and then set the ‘Start Month’ and ‘Length (Months) both to 1. Then, rename a second line item to ‘Property #2’ and set the ‘Start Month’ to the month when the 2nd acquisition will take place (should be equal to the Development Length) and the ‘Length (Months)’ for Property #2 to 1.
6) Finally, be sure to go to the ‘Perm Debt’ tab and set a loan amount for the loan to be taken out when you acquire the second property. This will fund at the same time as the 2nd acquisition.
7) Underwrite the remainder of the model the same as you otherwise would.

Best of luck!