[Spencer Burton]

6 years, 8 months ago in reply to: Capital Reserve and Capital Expenditures Double Counting? #3270

Hi Kim,

Great question! First let me point out that the nomenclature of the operating statement can be changed on the MF-Settings and ORI-Settings tab in case you want to use a different label than Capital Reserve, or any other.

With that said, I use Capital Reserve to refer to capital expenditures necessary to maintain the market condition of the property – exclusive of any leasing-related capital expenditures or property improvements. So Capital Reserve would address costs such as installing a new roof, repainting the building’s exterior, repaving the parking lot, etc.

Hope that helps!

Spencer

[Spencer Burton]

6 years, 8 months ago in reply to: Capping above market rents #3266

Hi Ryan,

I apologize for the late response – I’ve spent much of August traveling with family and now getting to questions! To your questions:

1) Excellent point and yes, the model allows you to account for these types of situations. You’ll notice the residual pro forma (column U of the MF-OpSt and ORI-OpSt tabs) cells are blue. That is so you can customize the residual (sale) pro forma to accommodate above/market income and expense items and adjust the residual value according. So for instance in the case of above market rents, you would adjust the Gross Potential Rent value in cell U12 to more reflect market rent. Or, as another example, you may adjust for below market real estate taxes (this occurs in California as an example), where reassessment only occurs at sale.

2) The All-in-One model does not have the ability to handle this sort of situation – I refer to this sort of situation as crystallization or equity reset. With that said, if you were to first run the analysis to refinance, you could then use that first workbook to fairly easily calculate the new equity split, and then run a second analysis with the new equity split after the refinance.

3) Unfortunately no, but I will add this to our feature request list. The value needed to accomplish this is calculated in the backend (see column BCY of the ORI-Calc tab), so adding it as an optional input is a fairly simple thing to do.

[Spencer Burton]

6 years, 8 months ago in reply to: Issue with IRR being incorrect because it's not counting initial investment? #2884

Rob,

Sorry for the delayed response – I was traveling much of August.

I follow your logic and this is an interesting discussion. I’ve recorded a short video/written a blog post explanation of why I chose to use month 1 as the start month for development analysis in the Ai1 rather than month 0. I also address the concern around the annual IRR being incorrect. I figured talking through the question via video is easier than typing it out!

With all of this said, it’s important to remember development analysis is generally modeled across the industry on a monthly, not annual, basis. So much of this discussion is academic only! Or in the other words, the annual IRR of a development deal is not a metric most developers are paying attention to. This is because development cash flows (those negative cash flows) occur over a period of months (usually 12+). If they were modeled on an annual basis, the IRR calculation would be greatly skewed (as you’ll see in the video).

https://www.adventuresincre.com/treatment-time-0-all-in-one-model/

I’ve attached the Excel Workbook scenario presented in the video to the above post.

Thanks for the discussion – very interesting!

Spencer

[Spencer Burton]

6 years, 9 months ago in reply to: Hotel as Property Type #3340

Unfortunately, I don’t have plans to add hotel as a property type to the All-in-One. I’m working on a standalone hotel model that I hope to release in the next year or so.

[Spencer Burton]

6 years, 9 months ago in reply to: Issue with IRR being incorrect because it's not counting initial investment? #2880

Robert,

This is a great observation and has been accounted for. Allow me to explain. I intentionally set the analysis begin month for acquisition deals to time 0, while I set the analysis begin month for development deals to time 1. This was to avoid confusion on the Budget tab when modeling development cash flows; although in hindsight if I were to build the model again I’d just start both in time 0.

To properly calculate monthly returns, I wrote a lengthy XIRR() formula for the monthly IRR calculation (see E67 and E88 on the Property CF tab) to essentially set the analysis start for development deals to month 1 while including a time 0 for acquisition deals.

Thankfully, calculating the annual IRR was much simpler. If the first value in a string of IRR() values is zero, Excel disregards that value and begins at the next non-zero value. As a result, the IRR() formula (E22 and E43 of the Property CF tab) is written to include time zero for both acquisition and development deals, however for development deals the time zero value is automatically disregarded. You can test this by turning on the development module, heading to the Property CF tab cell E22 and then in the cell above the formula writing the IRR() formula but without including time 0. You’ll find the resulting IRR is identical to the existing formula.

Thanks again for your comment!

Spencer

[Spencer Burton]

6 years, 9 months ago in reply to: Minor auto-fill error – All in One – Rent Roll #2898

Thanks for pointing this out and I’ll see if I can create a solution for this wrinkle in version beta v0.6.4.

In the meantime, if you’re using a version prior to v0.6.4, be sure that no blue values are in the shaded sections or those values may flow through into the analysis.

[Spencer Burton]

6 years, 9 months ago in reply to: Issue with Leasing Commissions double counting? #2878

Hi Robert,

Thanks for pointing this out! The intention of the ‘TI $’ and ‘LC $’ inputs on the RR tab are for the user to account for unpaid leasing costs most common to acquisition deals. For development deals, I recommend leaving those cells (columns AD:AE of the ORI-RR tab) blank and modeling 1st generation tenant improvements and leasing commissions in the development budget (‘Budget’ tab).

With that said and as you noticed, you can model 1st generation TIs and LCs for development deals on the ORI-RR tab. However, if there is insufficient operating cash flow in the period that the TIs/LCs are due, the negative cash flow will be added to the development budget (i.e. capitalized) as operating shortfall (row 52 of the Budget tab). This is to ensure there are sufficient sources to cover the shortfall. However, in the current version this results in double counting the TIs and LCs. I’ll work on a fix for this in the upcoming version in case users add TIs and LCs on the ORI-RR tab on development deals.

Thanks again!

Spencer

[Spencer Burton]

6 years, 9 months ago in reply to: S&U tab construction loan fees #2876

I’ve removed the Construction Loan fees input on the S&U tab, as loan fees are now entered on the Budget tab (rows 55:57), and will include this fix in the next release.

If you’re using a version earlier than beta v0.6.4, disregard the ‘Construction Loan fees’ input on the S&U tab.

Thanks for pointing this out!

[Spencer Burton]

6 years, 9 months ago in reply to: All in One Development Model #2992

To activate the development module, enter a ‘Development Length’ greater than 0 in cell M13 of the Summary.

With that said, we’ve heard from users who have had compatibility issues with versions of Excel older than 2013.

[Spencer Burton]

6 years, 9 months ago in reply to: Refinancing #2984

This is a great suggestion. I’ll add this to the feature request list.

[Spencer Burton]

6 years, 9 months ago in reply to: Missing MSA in Rate Matrix tab – solution? #3264

Thanks for pointing this out! I’ll include the Reno-Sparks MSA in the next version.

[Spencer Burton]

6 years, 10 months ago in reply to: Develop to sell option in Ai1 #2990

The Ai1 does not have that capability. In fact, the mechanics of a develop-to-lease model are fundamentally different than those of a develop-to-sell model. So the Ai1 is not capable of that.

With that said, my co-contributor Michael Belasco has a Condo Development Model that would do the trick. You can find it here:

https://www.adventuresincre.com/condominium-development-model/

[Spencer Burton]

6 years, 10 months ago in reply to: S&U tab construction loan fees #2872

Thanks for your comment, and you are correct. Beta v0.6.3 is not properly accounting for financing fees in the Sources and Uses. I’ll be rolling out an updated beta v0.6.4 this weekend that should correct the issue, among others.

[Spencer Burton]

6 years, 10 months ago in reply to: Upload Argus File #3260

Unfortunately no, the All-in-One model does not support an ARGUS drop. I have on my to do list to create an ARGUS drop model, where the user drops NOI and CapEx lines from ARGUS, and then the uses the model to layer in debt, calculate partnership returns, etc.

[Spencer Burton]

6 years, 10 months ago in reply to: In the Multifamily Development Mode Sources and Uses are not matching up #2868

To your two questions/comments.

1) This is a great catch. I’ll include the fix in the next version of the model.
2) How the multifamily module works, is the model assumes 100% physical occupancy once stabilized. The user then applies a general vacancy to the potential gross income such that the economic occupancy drops below 100%. You can see this in rows 8 and 9 of the MF-OpSt tab.