How to Create a Real Estate Cash Flow Model in Excel

Get FREE Advanced Excel Exercises with Solutions!

Excel is the most widely used tool for dealing with massive datasets. We can perform myriads of tasks of multiple dimensions in Excel. I will show you how to create a real estate cash flow model in Excel in this article.


Introduction to Cash Flow Statement

A cash flow statement is a financial statement that describes the inflows and outflows of cash over a certain period for a specific organization or company. It usually shows how any change in the balance sheet affects the cash and cash equivalents.

All the inflows a company receives while operating are described in that statement and all the corresponding expenses are also considered throughout a specific period.

The statement provides all the data to visualize the overall profit or loss a company is making. Remarkably, the net amount of cash at the end of the concerning time is the beginning balance for the next period. So, from the statement, the company gets the idea of what approach should be made to overcome the loss and what change should be made to increase the cash every time it runs the operation.

Now, I will discuss how to create a real estate cash flow model in Excel. I have divided the entire process into 8 steps. Let’s see these steps one by one.


Step 1: Preparing the Required Format to Create a Real Estate Cash Flow Model

The first step is to prepare a format of the cash flow statement.

Format of cash flow model

This is a cash flow statement format. The amounts will be calculated from the balance sheet and the income statement of the company.

Read More: How to Calculate Annual Cash Flow in Excel (with Easy Steps)


Step 2: Adjusting Depreciation Expense

Now, I will put the amounts one by one. These values will come from financial statements like the balance sheet and the income statement. But here, to keep things simple, I am going to use some random values.

First of all, we will consider the operational activities.

Let’s assume that the net income is $32000 and the depreciation expense is $14,500.

Read More: Create Cash Flow Statement Format Using Direct Method in Excel


Step 3: Measuring Change in Inventory

Now comes the change in inventory. The increase in inventory is $7,000. Since inventory is an asset, an increase in inventory will outflow the cash. So we have to use a negative sign here.

real estate cash flow model excel

Read More: Create Cash Flow Statement Format with Indirect Method in Excel


Similar Readings


Step 4: Adjusting Accounts Receivable

Now, we have to adjust the accounts receivable. Let’s assume an increase of $16,000. Similar to inventory, accounts receivable are an asset. So, an increase in accounts receivable will outflow the cash.

Read More: How to Calculate Cash Flow in Excel (7 Suitable Examples)


Step 5: Calculating Change in Accounts Payable

Next, I will calculate the change in accounts payable. This is a liability. That means an increase in accounts payable will increase the cash flow.

Let’s further assume that the increase is $9,000.

Adjust accounts payable real estate cash flow model excel

Read More: How to Calculate Operating Cash Flow in Excel (2 Easy Ways)


Step 6: Calculating Net Cash Flow from Operational Activities

This time, I will calculate the net cash flow from operational activities. For this, I will use the SUM function.

  • Go to D14 and write down the following formula
=SUM(D9:D13)

  • After that, press ENTER to get the output.

Net operating cash flow model

Read More: Cash Flow Statement Format in Excel for Construction Company


Similar Readings


Step 7: Measuring Cash Flow from Investment and Financial Activities

The next step is to measure the cash flow from the investing and financial activities. This will include all the activities related to finance and investment. These activities vary depending on the nature of the industry and the organization.

Let’s assume that the cash flow from the investing activities is $15,000 and the cash flow from the financial activities is $13,000

Read More: How to Create Investment Property Cash Flow Calculator in Excel


Step 8: Calculating Cash Flow

Finally, I will calculate the net cash flow of the organization for the specific period. This will be the arithmetic sum of the

  • Net cash flow from the operating activities.
  • Net cash flow from the investing activities.
  • Net cash flow from the financial activities.

To calculate it,

  • Go to D18 and write down the following formula
=SUM(D14:D16)

real estate cash flow model excel

  • Then, press ENTER to get the output.

real estate cash flow model excel

Read More: How to Create Monthly Cash Flow Statement Format in Excel


Things to Remember

  • If an asset increases, cash outflow occurs.
  • The information used in cash flow statements comes from the balance sheet and income statements.

Download Practice Workbook

Download this workbook and practice while going through the article.


Conclusion

I have explained how to create a real estate cash flow model in Excel in this article. I hope it helps everyone. If you have any suggestions, ideas, or feedback, please feel free to comment below. Please visit Exceldemy for more useful articles like this.


Related Articles

Akib Bin Rashid
Akib Bin Rashid

Hi, this is MD Akib Bin Rashid. I completed my BSc in Engineering back in 2019. After that, I did an MBA. Then, I joined as an Excel and VBA Content Developer at SOFTEKO Digital. Being passionate about data analytics and finance, I will try to assist you with Excel

We will be happy to hear your thoughts

Leave a reply

Advanced Excel Exercises with Solutions PDF

 

 

ExcelDemy
Logo