Calculating Returns On a Rental Property (ROI with Excel Template)
ฝัง
- เผยแพร่เมื่อ 14 พ.ค. 2024
- The first 500 people who click this link will get 2 free months of Skillshare Premium: skl.sh/xelplus6
Dive into real estate investment analysis using Excel! Learn to calculate cash-on-cash return and ROI to evaluate potential property investments effectively.
⬇️ DOWNLOAD the Excel workbook here: pages.xelplus.com/calculate-r...
🔍 What You'll Learn:
▪️ ROI & Cash Flow Calculation: Master the art of determining returns and monthly cash flow using Excel.
▪️ Template for Investment Analysis: Discover how to use a simple Excel template for analyzing various investments.
▪️ Financing & Expenses Consideration: Understand how to factor in financing, rehab costs, and other expenses.
🎓 Get Access to My Course "Fundamentals of Financial Analysis" HERE: www.xelplus.com/course/learn-...
🛠️ Highlights:
▪️ Real-life example: Evaluate a $200K property with a potential $1,400 monthly rent.
▪️ Practical tips for realistic and conservative financial planning.
▪️ Splitting loan payments into interest and principal for accurate ROI.
In a first step we'll calculate the Cash-On-Cash Return. This is the ratio (expressed as a percentage) of annual before-tax Cash Flow divided by the equity or own money invested in the property. This figure is useful when consistent monthly cash flows are the most important consideration for the investment. But because it's based on cash flows it considers the full debt service. So, both the interest and the principal pay down are deducted from the rental revenue. But most investors do not consider the principal payment as an expense. Because by reducing the outstanding principal balance we create equity.
Therefore, we'll also calculate the Return on Investment or RoI of the property. For this we'll exclude the principal pay down from the expenses. To do that we'll use the Excel formulas CUMIPMT and CUMPRINC to split the monthly annuity. The resulting cash flow we divide again by the equity invested in the property.
************************************************************
More finance & accounting videos: • Unleash your inner Fin...
Excel advanced formulas: • Excel Advanced Formula...
************************************************************
★ My Online Excel Courses ► www.xelplus.com/courses/
➡️ Join this channel to get access to perks: / @leilagharani
👕☕ Get the Official XelPlus MERCH: xelplus.creator-spring.com/
🎓 Not sure which of my Excel courses fits best for you? Take the quiz: www.xelplus.com/course-quiz/
🎥 RESOURCES I recommend: www.xelplus.com/resources/
🚩Let’s connect on social:
Instagram: / lgharani
LinkedIn: / xelplus
Note: This description contains affiliate links, which means at no additional cost to you, we will receive a small commission if you make a purchase using the links. This helps support the channel and allows us to continue to make videos like this. Thank you for your support!
This video was sponsored by Skillshare.
#excel
Grab the file I used in the video from here 👉 pages.xelplus.com/calculate-returns-file
Hey, this is fantastic. I like how you deliver the content and the explanation you provide is superb! You teach how to fish, instead of giving the fish itself! Keep it up!
Thank you - very clearly explained (as ever) and very helpful.👍
Very informative
I would like to see more accounting videos in future especially accruals , financial statements etc in detail .
Thanks 😊
Really enjoying your videos Leila! Great content, excellent tips and very clear and concise. Are you planning on doing a video on how to create a spreadsheet for tracking stocks and returns, profit and loss etc? Or maybe you already have something like this on your channel? Thank you!
Thank you Leila! Very, very helpful and so easy to understand. I saved the template and I will definitely use it. :)
I eagerly wait for your videos Leila. I guess no one explains such fancy excel workarounds like you do. Kudos!
Glad you like it :)
Thank you so much for this video. It is a huge help to me and you explain how to use it very well.
Great as always, thank you Leila! I usually do calculation before taking an action😃. NPV also is my favorite capital budgeting technique when it comes to invest in different projects.
Very good practice :) I have a video on time value of money coming up soon in case you are interested. Stay tuned.
Hi Leila
I started watching and learning from your excel tutorials recently. Your content has helped me learn a lot. Thank you, and blessings for the good work you do.
Query : do you also do financial modeling tutorials on excel?..would love a course on this. Or even, please recommend a good tutorial channel / website on the same
Thank you for this. Your tutorials are always excellent. I've subscribed to your channel. Big thumbs up too!
glad to see you are so pro in Excel . i mean your really enjoy it ...and it makes learning fun for us . 👍
Thanks a lot Leila, we really appreciate your effort
wow, this is outstanding. Thank you!
I watched this video more than 5 times, its valuable , thank you liela
I watched 3 Times Till Now
Beautiful! Very informative indeed. Thank you
I love your channel. Thanks for making such a great content available for free!
My pleasure Daniel. Hope it's helpful.
A great teacher and expert .. I like all of your videos ...
Finally found the content I'm looking for. Thank you for this Leila!
You're so welcome, Christian!
Thanks Leila. Very educating and helpful video. Please can you do one that compares renting vs buying a property?
Nice job young lady. Very informative and nicely presented.
Excellent Leila! You had me worried for a while with the morgage as I assumed one had the cash in the back pocket, so to speak. The next step might be a spreadsheet for a 10-year period which should take care of the issues of repairs and taxes, then one could calculate present values and IRRs. Another idea might be for business plans which have to forecast income and expenditures for small companies, as grants are usually contingent on providing such a cash flow forecast.
Lovely , never calculated in this way , hats off to u
Hi Leila! I've paused the video at 0:50 to give you my back-of-the-envelope calculation. I'm assuming a perpetuity rate of 5% which I know is entirely crazy, but it gives a ballpark result. Annual rental income of (1400x12) $16,800 / 0.05 = $336,000 which is more than 50% over the purchase price. So I am concluding it is a good investment. Now I'm going to watch the rest of your video.
Very concise explanation of the evaluation process. Thank you.
Glad you like the explanation.
Thankyou so much for your lesson!
Wow you are such a blessing!
Can you do a video of how to convert this spreadsheet in to form in Excel please. Thank you! Dusty
Very helpful and detailed video. Thank you for showing the interest and principal payment formulas. Make my life easier.
You're very welcome!
worth watching, very easy to follow. best wishes.
Thank you Leila, another subject filled with potentially lethal minefields taught brilliantly by yourself in a clear, easy to understand manner.
Wonderful! Glad you liked it.
Again an excellent video. Congratulations Leila 👏👏👏
Thank you Frederic :)
Thanks Leila, this is excellent to know and the template to use. Appreciate you sharing with us. Sydney, Australia 🇦🇺 🙏🙏🙏
Glad you like it Michael. Hope the template will come in handy for you.
Hey Leila; you have not kept any stone un turned. Absolutely amazing Cheers :)
Still many stones out there 😊
perfection in this vid.
A huge thank you for the info!!
Thanks Leila, it was really helpful to learn about those formulas. Being from an engineering background it is something that we never use in excel.
I was recently having a deal for a property and was checking on how the interests and loans, etc are to be calculated. I found a few tools online but I wanted something native in excel.
That really helped me model my financial plan for acquisition.
Again, thanks a lot...
Hope you keep sharing more such videos 😊
I'm glad to hear that. All the best for your property deal.
Wonderful Leila, by this you explained in a simple manner how to evaluate wide range of business opportunities.
Many thank
Maki S. Hussain
Baghdad - Iraq
Glad you like the video :)
Very informative :) thanks for sharing!!
Amazing video. I have seen many videos from you before about other topics related to Microsoft. Little I knew that your expertise also covered the investment field. Please don't stop teaching other like myself. Congratulations.
Wow, thanks!
Fantastic Leila!!!!!
How did you know I need this Leila? WOW, what a coincidence! Thank you so much.
Good timing then :) I hope it's helpful.
I've been trying to do this myself and was getting lost in the weeds. My spreadsheet was becoming more and more complicated! Mega thanks for this simple spreadsheet :) subscribed
Happy to have you aboard!
Another great video..many thanks
That’s a very good investment 😆 thank you so much for this video
You beautified the solution.
Very informative
I would like to know about financial feasibility study.
Thanks 😊
Great work, very informative and useful. You are doing great, God Bless you
Glad you like the video.
So good. Thanks!
This is great but would like to see with appreciation of house included. That can add (or subtract) a lot!
Thank you Leila, this was truly useful!
I'm so glad, Luis!
This was great to see as a finance graduate. I had no idea about an excel function that can separate principal and interest. That function should be widely known for everyone. Also the illustration showing that as you pay off the principal your ownership grows with the house. Really great watch, I'll be enrolling in your VBA udemy course very soon too! So thanks for everything you do.
They can really be useful Matthew. Looking forward to seeing you inside the course :)
Wow. I had created an IPMT table with every period of the entire loan and added them with SUMIF. Now I just learned about this cumulative function. Thank you! Is there a more advanced excel of this version available that can compare investment with stock investing return and also track tenant payments / HOA / property tax etc. ? This excel video is excellent.
Very nice explanation thank you
Great tutorial. QUESTION : HOW DO WE FACTOR HOME APPRECIATION over time TOWARDS ROI.
You are great Leila, God bless you,appreciate your research
My pleasure. I hope it's helpful.
Definitely, I used to search for your new videos, I covered most of the videos, it has
helped me a lot on my routine office task.
That is easy and clear, thank you Leila
You’re welcome 😊
Informative...Will use it when i want to buy a house for investment
excellent video and great blog
Nice and clear - well done Leila! Quick hint: to duplicate a formula in a cell below, instead of copying and pasting from edit mode at 12:49, just press CTRL' (that's control and apostrophe) in D51 and there it'll be! Second hint: don't rent properties to college kids unless you drastically increase maintenance expenses.
Thank you for the tips!
Wonderful explained 👏 thank you. I need How to Build a budget in Excel, please. For nonprofit organization 🙏 salaries. Fringe benefits...
I am blown away by how simple you made this for us. The tutorial is well structured, and the explanation is fantastic! Thank you once again!
PS - Can you explain Monthly Expenses > Real Estate Taxes a bit more in-depth? I'm trying to figure out if this applies in my region - Toronto Canada, and I am looking to purchase an Airbnb
Fantastic, thank you very much.
Thank you Leila, very helpful.
Would you (or someone else) have an idea on how to correctly reflect your potential property value increase (based on historic returns) into the ROI Return?
Cheers,
I invest for living. This was a great tutorial and thanks for making it interesting and also having a downloadable file. Cheers from Ethiopia
That's great feedback especially coming from someone who has experience in this area. Means a lot. Thanks!
Great video topic! Thanks Leila. Thumbs up!!
Thanks, Wayne!
Wonderful as usual
Excellent video.
Great video! Thank You! Now what would be considered a bad ROI? At which percentage is it a bad deal?
Hi Leila, i wonder if you have a video tutorial for small business like distribution company. Appreciate it!
Hi Leila!Awesome Tutorial I Have Just Learned Some New Functions Thank You :):):)
That's great. I hope they will come in handy at some point.
Pls do video on personal Networth on the excel calculations. Thank you
Great job!
Thanks for the CUMIPMT fun, Leila!!
You're CUMWLC anytime :)
CUMVERYCLEVER : )
@@excelisfun Oh, CUMON you guys.
@@drsteele4749 : ) : ) : )
You look great as always
Great video
Thanks good video!
Maam, can you make a video regarding the nature of Loan Amortization (or how is the computations work). Thank you for not ignoring my comment. More power to you and God bless.
Awesome video.
Cool worksheet! Let's make a super version that includes looking at this over a longer period of time: You have property increases, tax increases, rent increases, potentially property refurbishments, fencing, roofing, water heaters, hvac systems, plumbing or electrical for cost but I think there is also the added benefit of tax deductions.
That'd be great Robert. I'm sure we could create a nice version.
Great video thank you.
Excellent!
Your awesome this is exactly what I was looking for -
Glad I could help!
thank for this...
Ausgezeichnet, Liebe Leila, Danke Viele Grüße 💞
Danke liebe Katerina 🤗
Great Video !
Excellent walk-through! Now I'll have to go find some rental property :-)
Let us know when you're successful :)
Thanks mam for sharing knowledge . I am living small town of India we never calculate this.
Thank you so much
Very useful 👏👍
Great video Leila. Thanks :) :)
Thank you John. Glad you like it :)
VERY SWEET!!!
Thanks a million
Thanks again, Leila. I´ve copied the template, adjusted it for my purpose (in my country some of the variables are / are not relevant), and will start using it. One question: a mortgage is a super long-term loan where the property appreciates significantly, the rent level goes up as well, as well as costs (by the rate of inflation, normally). Are there excel functions to adjust for that as well? I mean, this appreciation thing will have a major impact on ROI over the long horizon, is that right? Thank you again. I loved this video explanation big time
Thank you
Leila, also you should take into account the annual appraisal of the home as additional revenue in the ROÍ calculation. Cool video.
👍
This is FANTASTIC!!! It would be great to also see this excel coupled visually with graphs. Additionally, I would like very much to see a retirement calculator as well that takes into account inflation.
thank you
Excellent
Hey really great 🙏🙏🙏
I will use this to not only calculate Rental of Poperty but also Cars.
Hi call .I'll help u with your business
two of my fav things in the world investing and excel, insta like you don't even have to say it ;)
Thank you for the insta like :)