Financial Model

Introduction

The template below is for anyone interested in exploring the development of an Accessory Dwelling Unit. This will help you plan potential costs, revenues, explore different scenarios, and get a sense for what the return on your investment might look like.

You can download it in Excel.

Getting Started

Go to the “Sources & Uses” sheet to build your budget in the “Uses” box. Expenses are grouped into Pre-Development, Construction, and Financing—these titles are typical but not exhaustive. Enter data in green cells; grey cells auto-calculate. Expenses go under Uses; funding goes under Sources. If using a loan, enter the amount under “HELOC/HEL/CL”—this feeds into the “Total Financed” cell. The “Check” cell shows any difference between total Sources and Uses.

Rents & Income

On the “Rents & Income” page, estimate rental revenue. In the green cells of the “Annual Rents & Income” box, input the number of units per unit type (this sheet allows for 10 Unit Types), monthly rent, and any allowances. Grey cells will calculate Net Rent per Month and Year. Use the green cells to estimate Annual Vacancy Rates and Rent Increases.

Operating Expenses

On the “Operating Expenses” sheet, input monthly costs in the “Total Per Month” column (green cells). Annual costs will calculate in grey cells. Use the green “% Annual Increase” column to estimate yearly increases.

A Note on Taxes***

The "tax" line on the operating expenses page represents an estimate of the potential increase in property tax value. Added income tax is not considered in this model. For all tax sitautions, it's recommended that individuals speak to a tax professional as all situations vary.

Loan Amortization

In the “Loan Amortization” sheet, the loan amount from “HELOC/HEL/CL” appears in grey. Fill in interest rate, term (years), and payments per year (green cells). Monthly payments and the amortization schedule will auto-fill below.

Cash Flow

On the “Cash” sheet, all cells are grey are automatically calculated using inputs from prior sheets. This tab shows five-year cash flow and projected ending cash each year. The Beginning Cash for Year 1 will be populated by the amount entered into the Personal Equity cell on the Sources and Uses page.