How to Create Best-Case and Worst-Case Property Analyses in REIA Professional

You already know that pro forma property analysis is an essential part of due diligence before jumping in and spending your money on a real estate investment.  You also know the value of the pro forma analysis is only as good as the care and consideration you give to all your assumptions about the purchase, operation and sale of the property.  Part of being a cautious and calculating investor is to consider best-case assumptions, worst case assumptions and some case in between.  Fortunately, this is an easy matter with RealData’s REIA Professional.

Here’s how:

  1. Create your initial analysis with REIA Pro with a complete set of assumptions.  It does not matter whether these are conservative or aggressive, just save the file with an appropriate name such as “300 Main Street conservative.xltm”
  2. After saving, use Excel’s Save As function to save a copy of the file with a new name.  That file might be  “300 Main Street aggressive.xltm”  Repeat the process for your third case.
  3. Adjust the data in the second two files to match the case.  Save the files.
  4. Open our Comparison Analysis add-on for REIA.
  5. Click the Add Property button to include all three of the files you have created for your property.  You will then see a side-by-side comparison of key metrics for all of the three cases.

Also consider using our new Decision Maker worksheet right within REIA Pro.  This unique dashboard tool allow you to see how 21 metrics (such as Cash on Cash and IRR) change as you change key assumptions about your purchase.  Change purchase price, vacancy rate, loan terms, etc.

Use these exercises to determine just how well your property might perform under a variety of future occurrences.

 

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