Valuate® is a real estate investment tool provided by Real Estate Financial Modeling for real estate investors. You can perform quick, detailed investment projection analysis on a residential or commercial property using Valuate®. The tool helps you verify and modify input assumptions, such as gross revenue and operating expenses, to identify whether a property is a good purchase opportunity.
The tool is offered as a link from every commercial and residential Property Details page. Navigating to the tool creates a Valuate® account on the user's behalf so the user can save property analyses for future usage. (The account uses a randomized email address and can be modified by the user if desired.)
The Valuate® tool works when a buyer is considering either a buy-and-hold strategy (for an income-producing property) or a flip (renovation). It is less relevant for redevelopment (teardown). The same tool is available in both the residential and commercial modes of RPR.
Launching the tool from RPR
From the Summary tab of the Property Details page, the user lands in Valuate® on a Quick Load screen that requires the entry of two fields: Year 1 Effective Gross Revenue and Year 1 Operating Expense. All other fields on this screen are optional—you can use the default entries or make changes if desired. Some fields, such as purchase price, are pre-populated from the property facts on the Property Details page.
Effective Gross Revenue is an estimate of lease, rent or other revenue that the buyer anticipates receiving in the first year of ownership. Operating Expense represents the costs the new owner will incur, such as taxes and utilities. Amounts must be entered in full dollar amounts, without decimals, and the transaction must be profitable in order for the user to proceed. After entering your estimates for these fields, click the "Submit" button and see your investment results.
Your results appear in a format titled Unlevered Analysis, which presents analysis outcomes such as net operating income, cash flow and unlevered income return.
Many real estate practitioners will find that these results suit their needs; advanced investors may wish to do a deeper dive into Valuate® and adjust variables such as:
- Closing costs
- Renovation budget
- Tax rate
- Holding period
When your analysis is complete, you can save it. Note that future changes in purchase price, like a listing price change, do not automatically update in your analysis. You can also maximize your work by:
- Sharing analysis results with a client by email.
- Exporting analysis results to an Excel or other file.
Valuate® is also available from the mobile app! You can quickly analyze properties when in the field right from your mobile app. Simply select the valuate® icon from your mobile app, and you’re ready to use the valuate® website from your mobile phone.
Other features and support
If you're having difficulty getting started, note that some entries will always work on the Quick Load screen. For a commercial property, try these values:
Purchase Price - $5,000,000
Year 1 Estimated Gross Revenue - $1,000,000
Year 1 Operating Expense - $600,000
Annual Growth Rate - 3%
For a residential property, try these values:
Purchase Price - $500,000
Year 1 Estimated Gross Revenue - $10,000
Year 1 Operating Expense - $6,000
Annual Growth Rate - 3%
Although Valuate® is provided as a free benefit to RPR users, RPR is not responsible for information or conclusions that may be reached using the tool. Also note that RPR passes through to Valuate® only the data needed to perform this analysis.
For more detailed information about Valuate's features and functions, use these links to the Valuate® Knowledge Base:
- Key terminology including Cap Rate, Closing Costs, Due Diligence, Net Operating Income, NPV, Loan to Value Percentage and more - https://valuateit.zendesk.com/hc/en-us/articles/205759699-Key-terms-used-in-Valuate-Input-lower-and-upper-bounds-Goal-Seek-inputs
- Sources of Funds Tab definitions including LTV, Amortizing, Maximum Loan to Value, Maximum Loan to Proceeds, Preferred return, Sponsor Equity and more. - https://valuateit.zendesk.com/hc/en-us/articles/206474265-Definition-of-Sources-of-Funds-tab-items
- Definition of Purchase/Sale Tab Items including capital reserve, closing costs, renovation budget, broker fee, transfer tax, net sales proceeds and more. - https://valuateit.zendesk.com/hc/en-us/articles/206474255-Definition-of-Purchase-Sale-tab-items
- Definition of Cash Flows Tab Items including holding period, year on year growth and holding period. - https://valuateit.zendesk.com/hc/en-us/articles/206474235-Definition-of-Cash-Flows-tab-items
- Definition of Home Tab Items including Cap Rate, Cash flow before debt service, Unlevered Income Return, Unlevered IRR, Unlevered Cash Return, Operating Cash Flow, Equity Multiple, NPV and more. - https://valuateit.zendesk.com/hc/en-us/articles/206474215-Definition-of-Home-tab-items-including-NPV
- How to use the "flip mode" for flipping a property - https://valuateit.zendesk.com/hc/en-us/articles/208776766-How-do-I-model-a-property-flip-analysis-
- How to analyze a deal with an investor using sweat equity - https://valuateit.zendesk.com/hc/en-us/articles/209937493
- How to create an embeddable “iframe” - https://valuateit.zendesk.com/hc/en-us/articles/204852345-How-to-create-an-embeddable-iframe-inline-frame-of-your-Valuate-analysis
- Setting the Waterfall Structure for Return of Capital and Profit Sharing - https://valuateit.zendesk.com/hc/en-us/articles/200553736-Setting-the-Waterfall-Structure-for-Return-of-Capital-and-Profit-Sharing-Sources-of-Funds-tab-
- How can I model a transaction with a negative cash flow in year 1 - https://valuateit.zendesk.com/hc/en-us/articles/210051053
- Loading Your Own Cash Flow Information - https://vimeo.com/159560154?utm_source=email&utm_medium=vimeo-cliptranscode-201504&utm_campaign=28749
- Residential Fair Market Rental rates - https://www.huduser.gov/portal/datasets/fmr.html
- How the cap rate is calculated - https://valuateit.zendesk.com/hc/en-us/articles/212126786
- How the cumulative capital costs are calculated - https://valuateit.zendesk.com/hc/en-us/articles/213709743
- How to share analyses with a third party - https://valuateit.zendesk.com/hc/en-us/articles/115000180523-I-want-to-test-sharing-a-file-to-a-third-party-by-sharing-it-to-myself-at-an-email-address-other-than-the-one-from-which-I-m-sharing-What-should-I-know-