Hi everyone,
I am working on creating a model that projects both GAAP and cash 3-year P&Ls for multiple properties. I have the following data for each property: monthly lease rental, lease expiry, current appraised value and future values for each year through 2030.
Does anyone have any templates for this? I would also appreciate any help as to how to project these out through the 3 years (wouldn't revenue be flat since it's just based on the rental income?), how to show this on a GAAP and cash-basis, etc.
Thanks!
Your rents would increase at renewal after lease expiration depending on the lease terms. Since lease agreements expire on a rolling basis there would be a loss to lease. Most residential rental payments are due by the 5th of each month, so you'd need to account for receivables and bad debt/allowance for bad debt and collections since you accrue and recognize revenue under GAAP basis. Under cash basis, you would recognize revenue and expenses when cash is actually received/used.
Thanks! That's really helpful.
To clarify your first point, if none of the property leases that I am evaluating expire within the next 3 years (which is all I am projecting the P&L out for), then rental revenue would be the same through the 3-year projection period. Is that right or am I missing something?
Maybe. Are rents the only source of revenue? I'm guessing this wouldn't be residential, but there might be escalation clauses that increase rents each year.
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