Excel template for financial analysis of LTRs

[Daniel Alvarez]

I've been ruminating over the low rate environment recently and whether to refi one or more of my long-term rentals, but I just struggled visualizing the full gamut of financial impacts, e.g. loan cost inefficiency, 30yrs vs 15yrs mortgages, maximizing cash flows vs cash-outs, tax positions, etc. Personally a cash-out refi could help me get more quickly into all-cash BRRRs or a REI venture in Spain, however I don't know to what extent this is at the expense of rental cash flows, and what is the wiser decision long term.

I've combed through posts online and looked for Excel templates to run some calcs and get a sense, but nothing really filled the void... 

So having some financial modeling background I could not resist any longer. This past week I've invested some hours after my 9 to 5 (between putting the babies to bed and my own bedtime) into a tool that would help me understand the impact of refinancing, depreciating or selling my LTRs. Of course it quickly snowballed so the result so far is a comprehensive, detailed model that captures quite a wide gamut of financial variables. Not shy to admit perhaps too detailed. Next I intend to cross check the calculations (esp. taxes) and simplify the layout. Also currently it just caters for LTRs.

If you can go past the level of detail I would love to hear any feedback from anyone interested, and especially from any Excel gurus, accountants, investors or tax experts out there with a keen eye. I'd love your suggestions, criticisms and comments and I'm happy to address questions as well. I'm an avid reader of BP but I'm also a self-taught investor like many of us here, barely 3 yrs deep into REI, so I'm certain blunders abound. In the least I hope the model is helpful to others, as a start if anything - just like I was searching for before this week.

Reader beware : model is not for the fainthearted. I've seen some simple templates circulating the internet and this is nothing alike.

Link below, there is no pwd on the file but the structure is protected :

https://drive.google.com/open?id=15ehUtK-JkK0px-S5IUxSaLwZSUrwNjSN

PS :  a key standout for me using the model has been the power of cash-out refis. Simply switching the right refis on or off you can see NOLs accumulate or deplete and the impact on returns. As with any model the motto "garbage-in, garbage-out" stands, so more detail often means harder to use and less accurate. Always question what you see and don't take anything for granted. Also the customary caveat, I'm not an expert or adviser of any kind so use at your own risk (and peril).

[Kerry Baird]

I am a proponent of “a confused mind says no” and I get burdened with information overload when making decisions.  Hopefully someone with a stronger intellect with spreadsheets will comment on that aspect.  

My comments is on taking action and the profit centers of real estate:

With real estate, time evens out many bumps, including paying too much. An example of that is my parents paying $10,000 for their first house in the 1960s, and their payment of $65 was really difficult for them. Would it matter much if they had paid $11,000 for that house? 

-We have inflation rising in most decades and bringing the prices up.  

-We have debt pay down, as our tenants progress through the mortgage

-We have tax benefits that enable us to trade up or simply claim deductions.

What refinancing does for YOU is allows you to catch those profit centers.  You have 3 properties now, and when the time is ripe, ie the tenants have paid down, inflation has gone up, and your tax situation calls for it, you can refinance and pull out cash and double your holdings with 3 more long term buys.  

And then a few more years go by and those profit centers enable you to refinance all 6 and double your holdings.  This is what I some of us here call going WIDE.  

Start paying them down to free up maximum cash flow, at a time when you want to consider retiring.  This is going DEEP. 

There are infinite variations. In my years of experience, it can be done slow and steady, and still accumulate many doors.