5. Expense Projections

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Expense projections are often ignored in real estate valuation but can have a big impact on final returns. Learn how to add them to your model in this lesson.

Lesson Notes

Adding expenses projections to your model

- Expense projections are best included underneath revenue projections
- If you expect an expense to vary considerably over time, enter individual assumptions for each year
- Otherwise, use a single inflation assumption that will be applied to every year
- I'll take the latter approach for this particular model

Keyboard shortcuts

ALT + I , R: Insert row
F4: Repeat previous action
CTRL + F3: Open name manager
ALT + N: Create a new name
CTRL + C: Copy selected item(s)
SHIFT + →: Select next cell
ALT + E , S , F: Paste formulas
F4(when typing): Anchor cells


As we saw in the previous lesson, our model is getting quite long and we need to scroll up and down the page quite often to access different parts of the model. To improve navigation, we can implement a simple trick that hides each section of the model under its heading. Let's start with Revenue projections and I'll select the row underneath Revenue projections and the remaining rows in that section.

And then I'll group these rows with Alt, A, G, G.

If I now want to hide these rows, I simply use the shortcut Alt, A, H.

And if I want to show this content again, I use the shortcut Alt, A, J.

These buttons can also be accessed in the Outline section of the ribbon.

Let's now minimize our Revenue projections with Alt, A, H, and group and hide the Expense projections, as well. So again, I'll select the row underneath and the remaining rows in the section and then Alt, A, G, G, to group and Alt, A, H, hide.

And off-camera, I complete the same action for the Operating statement, where I calculate my net operating income.

Now our evaluation model is much easier to navigate. When I want to access a particular section of the model, I simply navigate to the row underneath, say the Expense section, and press Alt, A, J. And this allows me access any section of the model from the same screen.

This technique becomes even more useful for much larger models that can run into hundreds of rows.