Annual Rental Growth Rate Question

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)


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)

pudding, what's your opinion? Comment below:

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. 

No_Perceptions, what's your opinion? Comment below:

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