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Level 1

Level 1: Welcome
Digital Calculator

As an introduction to BTR appraisal, Level 1 is modelling in its considerably basic form. Sometimes this level of modelling can be referred to 'back of the napkin/envelope'. These are generally not accompanied by a cash flow, not even the simple one provided, but I couldn’t help myself here…we are here to learn cash flows after all.

 

These numbers are very much the bread and butter of any appraisal and should be known, off the top of one’s head, without any need for presentation slides or having to take out the laptop.

Level 1: About
Working Coffee
Level 1: Features

Level 1 includes;


  • A considerably basic accommodation schedule

  • 2 cost items in the form of purchase and build cost

  • Management costs (service charge, voids, etc.) on rental income

  • An exit net yield and sales costs


Excel formulas


  • SUMPRODUCT – Get to know this one as it is vital from here on in. It simply multiplies 2 arrays, in this case in D26 we multiply the number of units (C12:C15) by their respective square footage (E12:E15)

  • The TRUE function – A more basic form of the IF function. In cell C46 we can see this in action which reads in English as follows; If C43 (Year 1) is less than or equal to C30 (Years to build) then apply the value of E28 (Total build cost) divided by C30. If the criteria is not met this in turn returns the value FALSE which to excel means it is a zero…and as everyone knows you can’t multiply by a zero (unless you are a certain Texas Ranger of course!). Think of TRUE as a (1) and FALSE as a (0).

  • IF – There wasn’t really much need for this here as I could of used the above TRUE formula to replicate what I was looking to do but an early intro is needed to IF statements as they become essential later on. IF statements allow us to look at a criteria and produce a result for both the TRUE and FALSE outcomes. Sometimes you do not want a zero value for a false statement, this helps counteract that.

  • AND – Allows me to add an additional criteria to my TRUE or FALSE statements, if all criteria under the AND formula are met then the value of TRUE is returned.

  • IF / AND – Cell C47 reads; If C43 (Year 1) is greater than C30 (Years to build) AND C43 (Year 1) is less than or equal to C30 (Years to build) + I18 (Years held after PC), if the value is true than apply the value of J13 (Net Operating Income per annum), if the value is false then apply a zero value.

  • $$ - These are what is known as absolute values and essentially sticky a cell when you want to drag/copy formulas. If you visit cell C46 once more you will see instead of C30 I have inserted $C$30 and $E$28, this is because I want to copy and paste my formula that I just filled out in C46 all the way over to L46. I want my formula to stick to cells $C$30 and $E$28 but I want part of my criteria in cell C43 to move with me. We see in cell D46 that almost everything remains constant in the formula except for the C43 has changed to D43, adjusting to a new criteria that needs to be met.

  • IRR – To calculate the Internal Rate of Return over the period.

Whilst every effort has been made to ensure complete accuracy, BTR Ireland accepts no responsibility to anyone whatsoever for any errors in this financial model or for any error or loss that may result from using it.  Potential investors and their professional advisers should review and carry out their own due diligence on this financial model themselves and form their own views in relation to the reasonableness, completeness, accuracy of calculations and achievability of the projections.

Level 2

Level 1: Text
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