In this Watch Me Build video I show you how to develop a customized rent schedule module for long-lasting leases. The foundation of the module is an easy INDEX/MATCH mix that takes a rent schedule and models the lease cash flows across the whole hold period.
I also consist of an optional file that you can download and use to follow in addition to the video. That file includes both a 'Template' and 'Completed' tab. You're also welcome to take the finished version, and include it straight into your own design.
Are you an Accelerator member? See the 'Modeling Short-Term and Long-Term Leases course in the curriculum. Additionally, if you're an Accelerator Advanced Member take a look at course 4, lesson 7 of the 'Advanced Modeling - Residential Or Commercial Property and Portfolio' endorsement for additional strategies for modeling leases. Not yet an Accelerator member? Consider signing up with the genuine estate monetary modeling training program used by top property business and elite universities to train the next generation of CRE experts.
A lease schedule is a table that notes out the base rent by date. So for circumstances, the rent schedule for a 75,000 SF spaced rented to a commercial on a 7-yr lease with 0.15/ SF bumps every year.
Rent/Yr
- Jan 1, 2018 - $337,500.
Jan 1, 2019 - $348,750.
Jan 1, 2020 - $360,000.
Jan 1, 2021 - $371,250.
Jan 1, 2022 - $382,500.
Jan 1, 2023 - $393,750
The lease schedule is consisted of in the lease to lay out the base rent paid by the occupant. So using the rent schedule above, we understand that the occupant pays $382,500 lease in 2022 ($ 31,875/ month). The lease schedule therefore ends up being an essential input for modeling the possible rent of a residential or commercial property.
A lease schedule module belongs of a genuine estate model that anticipates the possible rental earnings over the hold duration. So utilizing the example above, the lease schedule module would take the lease schedule and calculate precisely the lease for every single period. And ideally the module would do this in a dynamic way.
The module will include a rent roll listing the prominent inputs for each renter. So for circumstances, the lease roll would consist of tenant name, suite, leased area, lease start date, lease end date, current rent, and so on. Each renter would then have a lease schedule that outlines how the base lease modifications over time.
The module then takes the rent roll, the lease schedule, and designs the actual capital for each period.
Quick Note: Not thinking about DIY analysis? Consider dealing with A.CRE Consulting to manage your bespoke modeling task.
Watch Me Build Video - Partitioning the IRR in Real Estate
So in this Watch Me Build video, I show you how to construct a lease schedule module for a long-lasting lease. I initially drop in an export of a lease roll. From there, I include a lease roll for a single occupant (National Insulation, Inc.) and connect the relative info from the rent schedule to the lease roll.
Next, I design out the lease by month over a 132 month analysis duration. I utilize boolean logic to only model lease in durations where the lease is in force. And I use an INDEX/MATCH mix to pull in the rent from the lease schedule based upon the duration.
The outcome is a quick and easy way to dynamically design a rent schedule.
Download the Rent Schedule Module Exercise File and Module
To make this tool available to everyone, it is used on a "Pay What You're Able" basis with no minimum (go into $0 if you 'd like) or maximum (your support assists keep the material coming - common realty Excel modules cost $100+ per license). Just get in a rate together with an e-mail address to send the download link to, and after that click 'Continue'. If you have any questions about our "Pay What You're Able" program or why we provide our models on this basis, please connect to either Mike or Spencer.
We routinely update the model (see variation notes). Paid factors to the model get a brand-new download link via e-mail each time the model is upgraded.
Bonus: Watch Me Model Rent Schedule Cash Flows Using AI
In this quick bonus offer video, I use ChatGPT to model the month-to-month cash circulation for this exact same lease.
Frequently Asked Questions about Modeling a Lease Schedule in Excel and with AI
What is a lease schedule?
A lease schedule is a table that lists the base rent by date throughout the lease term. For instance, it may show yearly rent boosts for an occupant on a long-lasting lease, such as $337,500 in 2018, $348,750 in 2019, etc. It becomes a crucial input for modeling rental earnings.
What is a rent schedule module?
A rent schedule module is an element of a real estate design that forecasts rental earnings over the hold period. It utilizes occupant lease data from the lease roll and a lease schedule to model rent money streams dynamically for each analysis period.
How is rent designed throughout time in this module?
Rent is designed utilizing a 132-month analysis period. Boolean logic ensures rent is just shown when the lease is active. An INDEX/MATCH formula is then used to pull the right rent from the rent schedule based on the period.
What Excel methods are used in the lease schedule module?
The model mainly uses the INDEX/MATCH mix to pull rent worths and boolean reasoning to limit rent streams to the lease period. These solutions guarantee the module stays dynamic and scalable for longer leases or several renters.
What occupant is used in the example model?
The example model utilizes an occupant called National Insulation, Inc. The lease schedule and lease information for this single occupant are utilized to demonstrate how to structure and calculate lease capital.
Is a downloadable file provided with the tutorial?
Yes. A downloadable file is consisted of with both a 'Template' and 'Completed' version of the model. It is provided on a "Pay What You're Able" basis. Contributors get update e-mails when brand-new variations are released.
How is AI utilized in modeling rent cash circulations?
A bonus video shows how ChatGPT is used to model the very same lease money flow as performed in Excel. This showcases how AI can help in structure customized modeling reasoning using natural language prompts.
Where can I find out more about lease modeling thorough?
Accelerator members can check out detailed lease modeling in the 'Modeling Short-Term and Long-Term Leases' course. Advanced members can dive much deeper via Course 4, Lesson 7 of the 'Advanced Modeling - Residential Or Commercial Property and Portfolio' recommendation.
Version Notes
v1.01
- Misc. repairs and updates to Versions tab
v1.0
- Initial release
About the Author: Spencer Burton is Co-Founder and CEO of CRE Agents, an AI-powered platform training digital coworkers for business genuine estate. He has 20+ years of CRE experience and has actually underwritten over $30 billion in genuine estate throughout leading institutional companies.
