My first forecasting for a MF property

[Fran Arti]

Hi!

Im practicing underwriting multifamily deals and came up with this excel. I know there people selling models but I would like to understand the process and think that doing it myself will help me very much.

As you can see, guys, on acquisition year (0):

- Price as advertised

- 30% down payment

- GEI (Gross Estimated Income) is as advertised. From that I subtracted 50% of that as operating expenses plus an additional 10% for CapEx.

- Financing details are for 30 AM with a term at the end of 8th year. Ballon Payment or REFI.

- Closing costs (7%) are estimated each year for comparison purposes.

- ROE never goes down. At the beginning with the first projection I forecasted it went down around 10th year but I dont know what I changed.

- Equity is calculated by property yearly appreciation (2% for that market) plus paid principal that year plus Cashflow after subtracting 10% Capex. I know people include CapEx into the income´s 50% cut

- DSCR goes up and up all the time. S

- Isn’t ROE extremely high??

- IF SELL refers to the $ amount I would get before taxes if I sell ant the end of that year. (Full price for that year + cashflow after 10% capex - closing costs - remaining principal.

-YR after YR %VAR is the variation between prices. I call it selling power in the graph attached.

For this deal I see two options:

1.- Selling the property before 8th year and make that ballon payment.

2.- REFI 8th year and monitor ROE and IRR.

What do you think, guys?

BTW, my intention is to build an spreadsheet and run multiple scenarios at the same time:

- 30% Down Payment with 30,25 & 20 AM

- 35% Down Payment with 30,25 & 20 AM

- 40% Down Payment with 30,25 & 20 AM

Thanks!