Purpose
The purpose of this post is to explain how to use the Purchase Price and Acquisition Costs (Closing Costs & Capital Costs), or, “Acquisition Assumptions”, in CREModels’ Commercial Acquisition Model. This post will address how to properly input the Purchase Price, Closing Costs, and Capital Costs and how they flow through the model. As well as cover how the returns and values within the Purchase Assumptions are calculated.
Overview
The Acquisition Assumptions section contains three tables where the user can input information relating to acquisition costs of the property. This includes the Purchase Price, Closing Costs, and Capital Costs.
Purchase Price
In the Purchase Price table, the user must enter the total Purchase Price of the property in the single input cell. Directly to the left of this cell, the table will display the approximate going-in cap rate using the projected Year 1 NOI and Purchase Price. Beneath the input cell, the PSF value of the Purchase Price will be displayed. In the Total Acquisition Costs row, the total of the Purchase Price and all Closing Costs and Capital Costs will be displayed in the last column. Directly to the left of this cell, the table will display the approximate going-in cap rate using the projected Year 1 NOI and the Total Acquisition Costs. Beneath the input cell, the PSF value of the Total Acquisition Costs will be displayed
Closing Costs
In the Closing Costs table, the user may enter up to 10 Closing Cost line items. The first column of the Closing Costs table contains the inputs for the line item names. The last column contains the inputs for the Closing Costs amounts in total $. The Total Closing Costs will be added to the Total Acquisition Costs.
Capital Costs
In the Capital Costs table, the user may enter up to 10 Capital Cost line items. The first column of the Capital Costs table contains the inputs for the line item names. The last column contains the inputs for the Capital Costs amounts in total $. The Total Capital Costs will be added to the Total Acquisition Costs.