Advice on evaluating and presenting multi fam deals

[Enzennio Mallozzi]

Hi All,

Does anyone have advice on how to create a cashflow projection sheet, for both analysis and investor presentations. If anyone has a sample excel spreadsheet that they are willing to share, it would really appreciated.

also, does anyone know how to factor in depreciation? What are the benefits to investors?

[Vikram C.]

Enzennio, I don't agree with Mike and Jon's posts on one issue each:

1. Rent appreciation being a guess. It is true that any future projection is based on assumptions. If you project future rents at current levels, that is also just an assumption and one that is more likely to be wrong than a reasonable estimate of increases. I would not want to analyze an investment without doing my best to project the cash flows from it in a reasonable and conservative manner. (Such a projection could well assume rent decreases instead of increases if that's what seems most likely.)

2. IRR. IRR is not non-sense at all and is in fact a standard way to evaluate investment opportunities. It only becomes nonsense if you make nonsensical assumptions in calculating it. But I agree with Mike about the cap rate not being a very useful number.