Hello,
First I’d like to thank Frank and Dave for the resources & education they provide. I’m just getting started & finished Dave’s Mobile Home Park Investing Book and liked the profit and loss statement with seller proforma and adjusted proforma spreadsheet (eg proforma/adjusted Cap Rate, Cash on Cash return estimate, etc
Does anyone have a preferred software package that facilitates tracking presenting current and proforma income and expense numbers and then computing investment metrics such as cap rate, ROI, cash on cash, GRM, etc…Id like to find a software package that can use to capture data and generate reports for use for my own assessments and in negotiating price with sellers, financing with banks, etc…
Thanks,
Mike
I use a product from rentalsoftware dot com
Cash Flow Analyzer®
Investment Analysis Software
It is pretty easy to use and even has a mobile home park choice when picking asset type.
I build my own models in Apple Numbers (I used to use Microsoft Excel, but am switching over to being an all-Apple fanboy (:P) ). But regardless of which spreadsheet you use (or software package), be guided by Carveth Read’s maxim that “It is better to be vaguely right, than exactly wrong.”
Financial models can give a false sense of reliability. The deals I buy I can pencil-out on the back of an envelope and know whether it is going to be a good deal or not. I don’t need a spread sheet to tell me my cap rate to 5 decimal places in order to make a ‘go / no go’ decision.
My 2.06852 cents worth,
-jl-
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I find the software helpful to track lots of moving parts… so I can snapshot it, the say- if I put in 25,000 over the next year-and that does this to the return… then what. And 25,000 the year after that.
So the data is only as good as the input, but it is strong for forecasting. It will also figure partner returns, IRA returns etc… Which can be tricky due to differing tax benefits between partners depending on if they are active partners or passive- ‘passive loss rule’.
So if you want to buy one of my properties, and know how the return is affected by ‘Aunt Sally’ investing her IRA… the software will tell you.
This type of software program is used by the MAI or CCIM groups, as well as other analysis types that want to dig into internal rate of returns with and without tax benefits…
The general name is - APOD or Annual Property Operating Data
There are some free sources for the software- but if you want the added partnerships data etc- you will probably need to purchase a program…
I am always making up spreadsheets with different way of analyzing different properties more to satisfy the OCD side of my personality then for any real necessity. Cap rate, ROI, cash on cash, GRM really come down to back of an envelope calculations. The big unknown is expenses. Once you have a handle on that the rest is pretty simple – just pick up a calculator from the dollar store.
The way I do ROI is work out the cap rate, then apply it to down payment and figure the arbitrage rate on the loan and apply it to amount borrowed. Example:
10% cap, therefore the down payment dollars will bring you 10%
Loan 4.5%, therefore the borrowed dollars will bring you 5.5%.
Working up the ROI on a deal becomes really back of an envelope stuff once you see that.
One thing I have been doing lately that I did not do so much in the past is to analyze using GRM. Yes, I understand it is just another route to get to the same destination, and it is just another way of looking at the same thing. But the thing I like about it is the number tells you how much you are paying per dollar of rent you get to collect. Looking at it like that cuts through a bunch of BS thinking. A deal I looked at this morning had a GRM of 8.5. That means you are paying $8.50 for every rent dollar you get to try to collect. Last year I bought a park where I paid about $4.00 per rent dollar. Say your expenses run 40%. That mean you get to keep $.60 of that rent dollar you bought. If you pay $8.50 for that .60, you are making a 7% return on the capital. If you pay $4.00 for it, you are getting 15% return. It does not matter if it is your capital or the banks capital, that is what it will be making. If you have to pay the bank 4.5% to use their capital for the deal you will be making…well, you can see how simple all of this is; like Jefferson said; back of an envelope. And I think running these numbers and looking at it upside down, inside out an backwards is one of the most enjoyable parts of real estate investing business.
Hi,I’m a bit overwhelmed trying to consider all of the moving parts during evaluation. I do not share Randy’s fervor for math and looking at the numbers every which a way. I rely on calculators. Bought a lot of houses. Always relied on excel spreadsheet calculators.That being said, would one of you guys who enjoys making spreadsheets be willing to share yours with me? One that accounts for whether or not the income is from park owned or tenant owned and adjust accordingly. Does the same for any “notes” that come with park for park financed homes. Perhaps calculates offers based on all the above plus water/sewer and electric expenses whether they bill back or not?Email it to me at sellyourhousefast at g mail dot com if you’d be willing. Could sure use the help wrangling all these moving parts into something that will help me more quickly evaluate and generate offers.Thanks!Chris