Investment Services Agreement Template

Investment services agreement template, If you have built or purchased a investment template in Excel or other spreadsheet program, there are good and bad ways to model the pro forma financials of a prospective property investment. A professional-level investor will typically perform the analysis process thoroughly and with the perfect data to ensure the end result is a profit as opposed to a loss. Keep reading to find out more about the many dos and don’ts of using an Excel property investing template.

First off, do not jump into your modeling project without collecting all the necessary data beforehand. You may be under significant time pressure and the seller may not want to share critical performance data with you, but it is extremely important to have the appropriate historic earnings, cost, tax, vacancy, and insurance numbers handy before you begin modeling. Do whatever it takes to find the data you need for your investment template and make an accurate decision.

Next, do make sure you model cash flows as far into the future as possible, or at least till you believe the property will be marketed. If you have a 5 year investment time horizon, you should model at least 7-10 years of cash flows in the event the property turns out to be a good income producer or there’s a problem selling it at an affordable price later on.

Don’t assume the first numbers you plug into your investment template will lead to the most likely investment outcome. Test at least 10-15 situations, even more, varying the funding rates, cash investment, capitalization rates, vacancy, rental growth rate, rehab costs, tax assumptions, advertising costs, etc.. Try to ascertain how sensitive the net income is to different input variables. You can even automate the model via a basic simulation routine to run thousands of different situations with incremental increases and decreases for various important inputs. By analyzing the model and producing multiple possible outcomes, you will have a much better understanding of the possible risks and rewards of the investment.

In the long run, you must always do top quality data and analysis work and trust that your financial model to direct the investment choices and purchase price negotiation. If done correctly, your analysis may have uncovered significant potential opportunity to manage the property more effectively. Proper financial modeling leads to a significant information advantage over the seller, thereby generating the potential for more income and profits. Take a look the sample of investment services agreement template below at the attachment page.

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