STR Real Estate Investment Analysis Tool
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Buying properties for the sole purpose of renting them out in lease terms of less than 12 months has become an entire industry. It started to grow with the advents of AirBnB and VRBO. Now, anyone can put up listings and travelers are able to stay in homes rather than hotels if they choose.
The basic real estate investment premise behind this kind of business model is not too different from traditional real estate modeling, but there are a few unique nuances that had to be taken into account to best fit STR dynamics.
This model has done a great job at being able to account for dynamic inputs over time to get a full financial analysis for the owner and/or joint venture (GP/LP).The magic happens with an acquisition schedule. The user can define separate inputs for up to 20 properties (or tranches of properties) and the way you make a 'tranche' is that for a given property you can put in an arbitrary number of units and all the primary rental income/expense drivers can be defined as an 'average per unit' in order to properly deduce the financial impact of buying/operating/selling each tranche.
All of those assumptions roll into 20 separate monthly and annual pro forma tabs that are then aggregated into consolidated summaries. On these tabs, you will find rental income, operating expenses, NOI (net operating income), and all relevant cash flow items (debt/debt service/repayments/exit proceeds).
All of the data also rolls into a joint venture waterfall structure and the user can set the equity contributions of the GP and LP as well as the IRR hurdles and cash distributions for each hurdle. Final IRR / equity multiple / cash flow will then be reported for each side of the deal and on a project level. This includes a DCF Analysis / NPV for each.
You also get visualizations for all key financial items that will make it easier to digest the entire financial picture that you are asserting.
Buying properties for the sole purpose of renting them out in lease terms of less than 12 months has become an entire industry. It started to grow with the advents of AirBnB and VRBO. Now, anyone can put up listings and travelers are able to stay in homes rather than hotels if they choose.
The basic real estate investment premise behind this kind of business model is not too different from traditional real estate modeling, but there are a few unique nuances that had to be taken into account to best fit STR dynamics.
This model has done a great job at being able to account for dynamic inputs over time to get a full financial analysis for the owner and/or joint venture (GP/LP).The magic happens with an acquisition schedule. The user can define separate inputs for up to 20 properties (or tranches of properties) and the way you make a 'tranche' is that for a given property you can put in an arbitrary number of units and all the primary rental income/expense drivers can be defined as an 'average per unit' in order to properly deduce the financial impact of buying/operating/selling each tranche.
- All 20 property slots have assumptions for:
- Purchase date
- Purchase price
- Renovation period/cost and the cost will evenly spread over the renovation period
- Debt funding if applicable, refi/cap rate/LTV for refi if applicable and all relevant debt terms
- Pricing/growth
- Seasonality / utilization
- Pricing elasticity per month against base price
- Fixed and variable expenses (9 slots for each) and variable expenses run off seasonality inputs
- Exit month, exit cap, selling fees
All of those assumptions roll into 20 separate monthly and annual pro forma tabs that are then aggregated into consolidated summaries. On these tabs, you will find rental income, operating expenses, NOI (net operating income), and all relevant cash flow items (debt/debt service/repayments/exit proceeds).
All of the data also rolls into a joint venture waterfall structure and the user can set the equity contributions of the GP and LP as well as the IRR hurdles and cash distributions for each hurdle. Final IRR / equity multiple / cash flow will then be reported for each side of the deal and on a project level. This includes a DCF Analysis / NPV for each.
You also get visualizations for all key financial items that will make it easier to digest the entire financial picture that you are asserting.
