Using the Income Section in the New Analysis Form
Introduction
Hey everybody, this is Anton from IntellCRE and welcome to this quick tutorial where we explain how you can use the income section in the new analysis form and how you can use the different features within the section to model the income at your property and for your deal.
At the beginning of each analysis you have a prompt with boxes where you can upload your financials, your OM for the deal, and similar documents. If you’ve done so, then this income section would already have some data populated. If you haven’t, you can still do it in the form.
This is how the income section looks without any data.
Ways to Enter Unit Mix and Rent Data
There are a couple of options that we can use in order to get the data about our unit mix or about our rents into the system.
The first option is typing the data in manually. I can say I have nine units, all one bedroom, with a certain square footage, with a certain current rent, and then also model the pro forma rent.
I can always reset this section using the button Reset Section on the top right.
If we don’t have the data on our unit mix and we just want to work with the totals, we can use Type In Rent – All Totals. In that case we say how many units we have, our total current rental income on a monthly or an annual basis, as well as our pro forma rental income.
Let me reset the section once again and show you how to use the upload rent roll feature.
Uploading a Rent Roll
The document that you’re uploading can be a PDF or a spreadsheet. Make sure that you have the rent roll data preferably on the first workbook with the headers, that the data is there, and that the formatting is correct. Otherwise you can refer to our rent roll upload guidelines to see the details and best practices to make sure that you have the best possible results.
Now in order to upload a rent roll, I’m simply going to choose a rent roll from my computer. It should upload fairly quickly.
As we see, the data that’s being populated is the data on our unit mix, square footage, current rents, together with our lease expiration dates if this data is contained in your document.
For the pro forma rent, if the document contains data on market or pro forma rent, the system is going to pull that data as well.
Rent Roll Validation and Feedback
Before we do anything else, if for some reason you think that the data has not been parsed correctly, please use the thumbs down button. Our team is going to be notified and we’re going to be able to help you solve any problems as soon as possible.
If, on the other hand, you like the result, you can also let us know.
Filtering the Rent Roll
In the header up here, we can use that header to filter our rent roll based on certain characteristics.
Let’s say I just want to see all my one-bedroom units. I click on the filter icon and filter to show everything that is one bedroom.
As you can see, now I’m only looking at three units out of nine in my rent roll.
We can use similar filters for any other column in the rent roll.
Bulk Editing Rent Roll Values
Now let’s say I want to bulk edit my values.
I want to make sure that the pro forma rent for all my one-bed, one-bath units is 3,050.
I go to the same place where I would filter the pro forma rent. In the Edit All Filtered Values input, I put 3,050, and then I hit the checkmark.
This bulk turns all my pro forma rents to this desired number.
Once I want to clear my filters, I clear my filters and I see all my nine units back here.
Year One Rents
In markets with heavily rent-controlled environments, and for some reason we know that we need to use year-one rents as well as our pro forma rents, in the three dots on the top right we can enable Year One Rents.
This adds a new column for year-one rents and then a separate column for pro forma rents.
If we don’t want to use year-one rents, we simply disable year-one rents.
Unit Numbers vs Unit Counts (Advanced Options)
In the advanced options in the three dots on the top right, we can also group unit rows based on some common characteristics.
We can disable unit numbers.
Instead of using labels for the unit, such as 101, 102, and so on, we can use numbers of units.
If I disable unit numbers, this becomes my unit count. So if I put this to two, I suddenly have ten units, because I have captured the information about two units in a single row.
This is how I can switch between working with unit counts or working with unit numbers.
In this case, I can use unit numbers like 101, 102, 103, and so on.
Totals and Assessor Data Alignment
Below the rent roll, we have totals for the units, for the bedrooms, and for the square footage.
If the assessor’s data that the platform is pulling slightly differs from the data that’s captured in the rent roll, we’re going to get an orange warning indicating that the unit mix data is not one hundred percent matching the property-level data.
We can click on the orange text to make sure that those numbers get aligned.
Current Rent, Pro Forma Rent, and Upside Indicators
Below that, we see the totals for the current rent, monthly and annual, and the same for the pro forma rent.
We also see upside individually for each unit.
If we have a significant upside, the pro forma field is going to turn blue.
If we have a negative upside, the field is going to turn orange, notifying us that the pro forma rent is lower than the current rent.
Rent Growth and Loss Controls
Below the rent roll, we have the rent growth and loss controls.
This is the basic format.
We have assumptions around pro forma rent growth and pro forma vacancy. These numbers are automatically pulled by the platform, but you can override them in the analysis configuration.
Advanced Rent Growth Options
If we enable advanced options, we see additional controls.
We can add more rental loss or rental increment factors, such as concessions.
We can choose whether we want to work with percentages for these items or if we want to work with absolute values.
If we don’t want to use an item, we simply delete it.
Year-by-Year Modeling
We can toggle on year-by-year modeling.
This gives us year-by-year granularity for these items.
If we change a value and want the same number to apply for the remainder of the term, we click the arrow to apply it across all years.
If we don’t want to use year-by-year modeling, we toggle it off.
Lease-Up Modeling
We also have the lease-up function.
We use this in cases where our property is one hundred percent vacant and we are modeling the process of leasing the property up.
We start with a current occupancy, such as zero percent, and then set a lease-up period.
For a ten-unit property, setting a lease-up period of five months means that every month we’re leasing two more units until the property is fully leased.
Rent Stabilization
We also have rent stabilization.
This tells us how we are going from our current rents to our pro forma rents.
We define when we start increasing or stabilizing the rent and when we are done stabilizing the rent.
If it’s going to take three months and we’re starting in month one, this is how we model that.
Lease-Based Rent Stabilization
If we have lease expiration dates in the document that we uploaded, we can enable lease-based rent stabilization.
This is the most accurate way to model rent increases.
When it’s turned on, the system looks at when the leases are expiring and models the rent increases according to that schedule.
Unit-Level Notes
For individual rows in the rent roll, we can also make a note for each unit.
If we go to the three dots here and show advanced options, not only do we see the lease expiration separately, but we can also put a note.
For example, this is a legacy unit, needs renovation.
We can either make the note public. In that case, it’s going to appear in all the property presentations, whether a property website or a brochure.
Or if we make this note just internal, we’re going to see that, but it’s not going to appear on any of our reports.
So that is our rent roll and our rent growth and loss and other options that we have here.
Other Income
There are three more subsections that we can use.
If we have any other revenue streams to the property, any other income, we can use the other income.
There are two ways to use this.
Either we can do this manually. For example, laundry, and we set what the laundry income is going to be on a monthly or an annual or per-unit basis, and the same for pro forma.
And of course, our other income is going to have a certain growth rate as well.
Or we can actually upload a document here. A T12 would be the most common example, and the system is going to pull the other income items from that document and populate them here in this section.
That’s probably the easiest way to do that.
And of course, we see our yearly totals for the other income as well.
If we don’t want to use the section, we can simply cancel other income.
Rent Comparables
After we’ve situated our rent roll and our other income, let’s look at the rent comps for this deal.
We have a couple of options here. We can search the map or we can have the system AI suggest suitable rent comps for us.
This is what we’ve done here.
In this table, the table shows us the rent comp set that we have.
We see the types of units, the rents, the rent per square foot.
Below our rent comp table, we see the averages and how they compare to our subject property.
We see the average rents, we see the rent per square foot, and we also see the percentage that’s showing us how our pro forma rents differ from the average rents in the rent comp set.
In our case, we had pro forma rent in the document that we uploaded.
So these numbers are basically pulled from that document and they’re not updating automatically.
But in cases where this information is missing, choosing the rent comps would automatically trigger the calculation that would populate these numbers, basically do the pro forma analysis for us.
So here we also see that the system is saying, from your rent comp set, this is the range.
Click to autofill the pro forma rent.
Map-Based Rent Comp Selection
In case we want to cherry-pick our rent comps using the map view, we can go to search rent comps.
This is going to open up a map.
It’s going to show us the comps in the area.
We can use various map features like the polygon to draw a polygon isolating a certain neighborhood where we want to look for comps.
We can also use the filters up here and filter based on property-level data.
Show me only properties that have a certain unit range or year built or building size.
We can also use the unit-level filter.
Show me only properties where the units for rent have a certain number of bedrooms, bathrooms, square footage, and so on.
We can also use the rent filter if we have a ballpark number for what the pro forma rents we’re trying to justify or find, and then use that filter as well.
In the map view, on the right side, we have the results.
We can click on the plus to select them and add them to our selected comp set, or minus if we want to deselect them to declutter our view and just look at the most relevant ones, and then decide which ones we want to select.
The ones that we select are going to be visible in our selected comp tab here.
In case we want to create a new comp, our own comp, or if we want to import a whole library of comps, we can do so using the functions here.
We can upload a whole library of comps.
That gets stored in the system, and you have the ability to build your own centralized database of comps and data as well.
Once we’re done with the rent comps, we can save and close.
And as mentioned, here’s our rent comp set with the averages and all of that.
Modeling ADUs
The final subsection in the income that we can use, if we’re modeling a situation where we’re thinking of adding ADUs to our property, we can click on ADUs.
Here we basically say we’re thinking of adding two ADUs, one bedroom, one bathroom, with a certain square footage, with a certain pro forma rent.
Here we see that on the right sidebar this deal is going from a nine-unit deal to an eleven-unit deal.
We can offset the income from the ADUs because it’s going to take some time to finish the construction and get the tenants in.
We can also factor in the building cost for the ADUs in the expense section.
Vacancy Handling
In case the document that we’re uploading has a zero current rent for a certain unit, this would show as zero and it would automatically calculate the vacancy.
But in case we want to see what the actual vacancy is in terms of absolute values, we can keep the rent here and switch the label to vacant.
In that case, we capture the full information.
Mixed-Use Properties
Finally, if we’re working with a mixed-use property, we enable mixed use, for example multifamily and retail, in the property section.
Then in the income section we see two components.
We have the multifamily component of the income.
And we also have the retail component of the income, with its own controls, growth rates, vacancy, and other options.
Closing
I hope this was helpful in showing you how to use the income section for your own deals.
If you run into any questions, hit the support button and let our team know so we can help you as quickly as possible.
See you in the next tutorial.
