1. Fill in each of the parameters with a Rate of increase along the years.

2. Calculate the Cash Flow items over the years.

3. Obtain the Net Present Value (NPV).

Calculate using excel formulas

Is it worth investing in a real estate? Rate of increase Year 2 Year 3 Year 4 Year 5 5% Parameters Cost/ft? Estate size Rent / ft? Operating expense / ft? Vacancy rate Percent financed Mortgage rate Sale multiple Cost of capital 6% -4% Year 1 $90.00 200,000 $15.00 $1.20 30% 85% 12% 12 10% Cash Flow Year 2 Year 3 Year 4 Year 5 Year 1 2,100,000 Gross income Operating expense Net operating income Interest cost Before-tax cash flow Down payment (at time 0) Sale price Mortgage cost End of year cash flows Net Present Value (NPV)