Lesson 5: Pro Forma ROI Analysis (1 of 2)

September 7, 2021

  • Comparable Sales Analysis
  • Exam 1 on Thu, Sep 16
    • Valuation and ROI Analysis 1-page (yes, ONLY 1 page) summary due at time of exam
    • Bring a draft to class for review on Tue Sep 14
    • Don’t worry we will work on it in class this week

Presentation:

  • Pro Forma ROI Analysis
    • ROI worksheet
    • Begin with Valuation – what’s the property worth?
    • Estimate rental income – fair market rent?
    • Estimate expenses
      • Property taxes
      • Insurance
      • Maintenance
      • Repairs
      • Management
      • Utilities
    • Use an amortization schedule
      • Calculate interest payments
      • Calculate principal payments
    • Estimate tax benefits
      • Depreciation
      • Tax shelter
      • Tax savings
    • Make assumptions
      • Appreciation of property value
      • Rent appreciation
      • Expense inflation
    • Estimate ROI
      • Total
      • Annualized

Assignment:

  • Complete a “first draft” valuation and ROI worksheet for your selected property
  • Bring questions on Thu

Justin

Justin Holman is CEO of Aftermarket Analytics, where he leads efforts to develop cutting edge sales forecasting and inventory optimization technology for the Automotive Aftermarket. Prior to joining Aftermarket Analytics, Justin managed corporate consulting for the Strategy & Analytics division at MapInfo Corporation, leading major projects for retail clients including The Home Depot, Darden Restaurants, Bridgestone-Firestone, Sainsbury’s and New York & Company. Before that, Justin served as Vice President of Software Development at LogicTools, now part of IBM's supply chain application software group. Justin holds a B.A. from Claremont McKenna College, a Ph.D. from the University of Oregon and an Executive Management certificate from Northwestern University's Kellogg School of Management.

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