These are projects posted by the students of Dr. Gove Allen at Brigham Young University. These students have taken one semester-long course on VBA and generally have had no prior programming experience

Wednesday, April 11, 2012

Arizona Real Estate Wizard

The business that my project is designed to facilitate is that of real estate investing. This spreadsheet is designed to accomplish two business purposes:

1. Quickly produce a customizable “shell,” discounted-cash-flow-model (DCF Model), tailored to an investment in real estate.

2. Gather and organize data relevant to the inputs of that model.

Real estate can be an excellent opportunity to store and grow your wealth. However, it becomes a daunting task evaluating a real estate investment opportunity, to the extent that you become comfortable with investing such a large amount of your personal net worth. This spreadsheet is designed to assist in the investment decision analysis.

DCF Model

The DCF model is ubiquitous in the business world. It is a decision tool that allows finance professionals to decide which ventures/projects to undertake. Real estate can be approached in the same way. Deriving the free cash flows of a real estate investment can be difficult. Taxes, assumptions, and imperfect market data, and other economic complexities lend to the difficulty of creating a DCF model for a piece of real estate. This workbook generates a spreadsheet that takes all of these complexities into consideration. With the click of a button a spreadsheet is created, ready for the user to ingress his/her inputs. Then, the model does the rest of the calculation, generating over 10 figures to evaluate the investment.

Market Data

This is not all that the spreadsheet does. A model only generates outputs as good as its inputs, or in other words “garbage in, garbage out.” For this reason, I have built a significant amount of tools that allow a real estate investor to analyze “the market,” enabling him/her to more accurately determine the inputs to the model. These tools query online, up-to-date real estate databases and extract information into organized tables. The user can input any city in Arizona and their maximum price (either rental or purchase price) and the workbook will return information matching those criteria for residential detached homes and townhouses. From that point the user has an organized table of properties that can be analyzed. If more information is needed regarding any single property the user has the capability to pull more information on that specific property at the click of a button. The workbook also allows for quick web access to any particular property, at the click of a button.

1 comment:

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