Forum Replies Created
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Spencer Burton
Keymaster5 years, 6 months ago in reply to: Post Appraisal Development Tracking #2998Hi Pratik,
Thanks for the comment/suggestion. The Ai1 is meant to be used as a forecasting and valuation tool. I hadn’t considered adding reporting capabilities, but I will add it to the list of suggestions and take a look at what that would involve. If doing so isn’t too difficult, I’ll add a reporting module.
Spencer
Keymaster5 years, 6 months ago in reply to: Expense Reimbursement Error in ORI-Calc tab when changing Recovery % of OpEx #2908Oz,
Thanks for pointing this out. It sounds like you’re modeling it correctly, so let me take a look at what’s going on and include a fix in the next update.
Spencer
Keymaster5 years, 7 months ago in reply to: Expense Reimbursement – ORI calc tab #2906Tim,
In version 0.6.4 (August 25, 2018), I made a major change to how ORI rent bumps were calculated. In previous versions, ORI rent increases at the tenant level occurred on the yearly anniversary of the analysis start date. This was a major limitation in the model, and had originally been modeled this way only because when I first built the ORI module, I wasn’t aware of a simple way to model rent bumps on the anniversary of each leases start date.
In late 2017, I developed a relatively simple formula to find the anniversary of a lease’s start date. However, adding that formula in the All-in-One wasn’t a simple task, since it required finding and replacing the old logic with the new logic throughout the ORI-RR and ORI-Calc tab. I eventually found the time to roll out this update, which as I mentioned occurred in August 2018.
However, making this change left some superfluous logic in various formulas. Most of that logic I found and deleted, but apparently not all of it as you have found more! Keep in mind, I say superfluous logic because whether this particular logic is in the model, or not, doesn’t matter. It has no impact on the calculations themselves.
For example, in the case you point out (cell Q12 of the ORI-Calc tab). The 2nd nested IF statement in cell Q12 states [IF(Q$11>$J12,P12,)] or in other words: If Q11 (which is now blank and no longer used), is greater than J12 (1st gen lease end date), then return the previous year’s rent (P12), otherwise continue with the formula. The balance of the formula then returns the 1st gen contract rent for that year, including any rent bump as of the anniversary of the lease start date, per the new logic I developed. I’d inadvertently failed to delete that old logic, nonetheless that old logic is such that it would never be true and thus, never realized.
Thanks for pointing out the unnecessary logic! I’ll clean it up in the next version release.
Spencer
KeymasterThe Fixed % assumption refers to what percentage of that particular other income or expense assumption is fixed vs variable relative to occupancy.
So for instance, if a $1,000 expense item is 100% fixed and occupancy is 0%, the model would assume $1,000 for that period. If the item is 0% fixed, the model would assume $0 for that period.
The calculation looks something like this:
Cash Flow in a Given Period = (% Fixed x Amount ) + ((1 – % Fixed) x Amount x Occupancy %)
The idea behind the Fixed % concept is that certain other income and expense items are impacted by occupancy. Storage Income for instance would drop if occupancy dropped in an apartment building, just like cleaning expenses would drop if occupancy dropped in an office building. Thus, the Fixed % assumption allows you to account for the impact occupancy has on those types of other income and expense items.
KeymasterSorry for the delay on responding here!
To answer apalm’s questions:
1) To do this, set ‘Roll to Market’ (column O of the MF-RR tab) to ‘In Month”, and then set the month you’d like that unit type to roll to market. I recognize this isn’t a perfect solution, since it rolls unit types to market at a month you specify rather than when each unit turns but it should get you pretty close to the same answer.
2) Hmm.. This is a good question. In theory, the model is already doing this. Assuming you’re using the acquisition module (not the development module) to model the value-add scenario, 100% of the permanent loan funds in time zero. This means that any cash shortfall thereafter is covered by equity. You can see the total Equity contributions on the Equity CF tab (cell D13). Compare that to the Initial Equity contribution (Summary tab cell Q43) to understand how much additional equity is contributed after time zero. It’s true that the equity contributed is net of operating cash flow, but (if I’m thinking about this correctly) from an Equity IRR standpoint there shouldn’t be a difference.
Keymaster5 years, 7 months ago in reply to: Condominium Conversion #3342Keymaster5 years, 7 months ago in reply to: Which model should I use? #3280Isaac,
We don’t have a condo conversion model yet on our site. With that said, my co-contributor Michael Belasco’s condo development model may do what you need. While it’s a ground-up development model, you could easily call your acquisition price the land price, your renovation costs your development costs, and arrive at the same place. You can find that model here:
https://www.adventuresincre.com/condominium-development-model/
Keymaster5 years, 7 months ago in reply to: Capital Reserve and Capital Expenditures Double Counting? #3274I’ve done a couple of tutorials that indirectly touch on the Operating Statement (OpSt tabs) tabs. If you haven’t already, check out:
https://www.adventuresincre.com/tenth-walkthrough-office-value-add/
and
https://www.adventuresincre.com/sixth-walkthrough-apartment-acquisition/
Keymaster5 years, 7 months ago in reply to: Stabilized Value (Trended) #3278Thanks for pointing this out! I’ve added a fix in beta v0.6.5 (releasing this weekend).
Keymaster5 years, 7 months ago in reply to: Interest Reserve Calculation toggle #2994Hi Robert,
Thanks for the request. This has actually already been built into the model, but perhaps not explained properly. In the latest version of the model I’m about to release, I’ve updated some of the titles to make this more clear. I’ve also added a LTC (w/o Int. Reserve) calculation to the S&U tab so you can size the loan without the Interest Reserve if necessary.
You can find the breakdown of Construction Loan without Interest Reserve and the Interest Reserve in columns U, V, and W of the S&U tab. As mentioned, in column V you’ll find a % of cost metric to help you size a loan where the interest reserve is covered by equity.
The only wrinkle here, is to you’ll need to do a quick side calculation before using the Construction Loan macro to size the loan. So for instance, if you’re solving for a 65% LTC loan without interest reserve and you have beta v0.6.5 or newer. Enter a value in cell E9 on the S&U tab (LTC assumption with interest reserve) that is several percent above 65% (e.g. 69%) and click the ‘Run Const. Loan Macro’ button. Then make note of the LTC without Interest Reserve (V10) and see how close you are to 65%. Keep changing the value in cell E9 and running the Const. Loan Macro until the LTC without Interest Reserve equals 65%.
Best!
Keymaster5 years, 7 months ago in reply to: Development Loan Schedule #2904Quick follow-up on this issue.
As it turns out, while the Loan Remaining row on the Dev-Interest Calc tab (row 24) is calculating incorrectly, the sources and uses cash flows that ultimately flow into the DCF (and affect returns) are calculating correctly. You can see this be looking at cells U5:CD23 on the S&U tab and comparing that to the DCF (Property CF tab) rows 81 and 82.
The only real impact of this error, is that the reported Construction Loan amount and the Interest Reserve on the S&U tab (cells C7 and C8) are not correct. The total of the two is correct, which the total is the total construction loan, but the interest reserve is too high and the construction loan before the reserve is too low.
Keymaster5 years, 7 months ago in reply to: Development Loan Schedule #2902Pratik,
Thanks for pointing this out! You are correct, when we added the Lender Fees section to the Budget tab recently, we did not configure the loan correctly to pick that up. I’ll include a fix in the upcoming version of the model
Spencer
Keymaster5 years, 8 months ago in reply to: Minor print error – All in One – Summary Tab – vr 6.4 #2900Thanks for the heads up. I’ll cleanup the print ranges in the next version of the model.
Spencer
Keymaster5 years, 8 months ago in reply to: Ai1 IRR discrepancies #3268Great question. I actually just published a post/video that should address the monthly vs annual IRR in development analysis.
https://www.adventuresincre.com/treatment-time-0-all-in-one-model/Spoiler alert: in most cases, ignore annual IRR in development analysis.
Keymaster5 years, 8 months ago in reply to: How to handle Analysis Date different than Lease date? #3216Thanks for the reminder! I’ve added the logic to beta v0.6.4 which I’ll release Aug 25, 2018.