Hi Guys,
I was hoping someone could help me with writing my formula for rental growths.
I have a Y1 price per sqft. with Y1, Y2, Y3 growth rates alongside varying occupancy rates.
I am trying to project out monthly cashflows but have now confused myself on how to proceed...
I was doing =SUM(Rent Psf * Occupancy/12)* (1+r)^(Y-1)
But there are a few different ways to do this - which is correct....
- (1+r)^(M-1)
-(1+r)^(1/12)
I want to know what is best to use for monthly growing - or at the start of each year growth - which I think is incorporated here somewhere.
*Note I have a vlookup for the actual rate since it varies depending on year but for simplicity have left this out.
Y = Year
M = Month
I cannot take last month's revenue since it was dependent on occupancy which moves (i.e. it is not stabilised)
Comments (5)
Anyone? :/
If this a monthly model, for rent growth monthly, starting in month 2, look back at the previous month, and multiply by (1+.03/12) and if you want to do annual rent growth, in month 13, look back to month 1 and multiple by (1+.03) and drag the formula across. If you want to adjust rent growth, create a table and use a lookup function to find the right growth rate.
You want to match it up with the cash flows. How predictable are the increases? Increases can be very easy to predict with big blocks of office tenants. It can be more uniform with a 250 unit apartment building.
What kind of property?
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