Buyer's Guide: Investment Analysis Software

BUYER'S GUIDE: Investment Analysis Software

A Good Investment

BY MICHAEL ANTONIAK

Want to determine which property holds the most money-making potential? Or when is the opportune time to buy or sell? Real estate investment analysis software can be your crystal ball to taking some of the guesswork out of evaluating properties.

Jay Davis, a commercial real estate adviser with Atlanta Commercial Real Estate Services Inc., unlocks some of those investing unknowns with Landlord Cash Flow Analyzer software, one program in a diverse catalog of real estate investment analysis applications. The $80 software functions as an add-on to Microsoft Corp.’s Excel spreadsheet software.

“Most of our clients are buyers or investors trying to determine how profitable a particular property will be, or which of several properties represents their best investment,” says Davis, who focuses mostly on multifamily dwellings and office and warehouse “flex space” valued between $1 million and $3 million. “With the software, it’s easy to do those comparisons, and provide a realistic projection of the income any property will produce.”

Such software is becoming an essential tool of real estate investing, whether planning your own portfolio or advising clients on their next move. You simply input financial data and then turn it over to the application to deliver a realistic assessment of the costs and potential payback for any type of real estate, from the modest apartment to a sprawling complex. The software can be used to test different expense scenarios, identify financial risks, project pre- and post-tax income 10 or 20 years out, and evaluate the value of similar buildings or parcels.

“When buyers see those numbers, they have a better understanding of what a property is really worth and how changes in any of the details can affect their investment,” says Christopher Lee at Coldwell Banker Commercial Amato & Associates in Newark, Del. Lee uses the Web-based REI Wise Commercial software, which costs him just under $300 a year.

Colin Fox, CCIM, president of Colin Fox Associates in Houston, uses Realm Business Solutions’ Argus software to demonstrate the income-producing potential of large office buildings and retail centers for his institutional investors and investment trusts worldwide. Fox says the software handles complicated scenarios in lease and probability analyses and helps him establish instant credibility with his clients. And, he says, it was well worth the more than $4,000 price tag. “We’re a small brokerage,” Fox says, “but because of all of what this software can do and the other technology we use, we’re able to compete with the big boys on a level playing field.”

Which is Your Best Investment?

The biggest challenge of investment analysis software isn’t actually using it, but rather trying to choose from the many options available.

Here’s what you should consider:

Your needs. Some programs are better suited for analyzing residential or commercial properties, providing a quick overview of value and earning potential, or giving cost and cash flow projections 10 or more years out. Also, programs that create easily grasped reports and graphs can be as important as the data itself, especially when you can use them to demonstrate your market savvy to win clients or listings.
Skill set. Several solutions are Excel add-ons. If you’re familiar with Excel, take a look at these first, as you’ll be up and running right away. With standalone applications, consider the ease of use and required learning curve.
Clients. Are your customers small-time landlords or institutional investors? The level of sophistication each requires from analysis and advisers varies, which will help dictate the capabilities you’ll need from the software.
Homework. If you can’t make out the terminology of these products, you won’t be able to fairly evaluate their functions. Keep a real estate glossary nearby if you’re not familiar with such terms as market and asset valuation, annual property operating data (APOD), pre- and post-tax equity dividend, internal rate of return (IRR), modified internal rate of return (MIRR), sensitivity analysis, and Monte Carlo simulations.
Cost. A higher price does not necessarily indicate a better software solution. Take advantage of vendor offers to sample reports and try demos and trial versions to identify the software best suited to the insights and advice you want to provide clients. Then you’ll be able to make a smart investment.

Investment Analysis Software

RealBenefits $150K $39 RealBenefits.com, www.realbenefitssoftware.com, 360/225-4646. Entry-level module compatible with Microsoft Excel. The program is for analysis of an income generating property worth up to $150,000. Includes annual property operating data, financial analysis to determine benefits of property ownership, appreciation calculator, amortization calculator and tables, and analysis of startup cash flow needed to complete a new rental property. Step-up versions available for properties worth up to $100 million.

The Real Estate Geek $39.95 Geek-To-Go.com, www.geek-to-go.com, contact through e-mail form on Web site. Investment analysis software for use with Palm or Pocket PC-compatible PDAs and smart phones. Projects annual cash flow and offers profitability analysis based on acquisition costs, improvements, expenses, rental income, and financial strategy. Includes pop-up calculator for use in Palm applications. Excel interface and template for reports. Supports data synch with a PC.

Investment Property Profile $47 Milt Tanzer Corp., www.investmentre.com, contact through e-mail form on Web site. Windows software for preparing two-page financial analysis/projection for any income producing property. “What if?” application allows you to explore how different numbers impact your return on investment and helps determine current market value of property, based on criteria used when purchased. Offers a “business evaluation” program for financial analysis of existing business, and “forms and checklists” feature with questions for sellers and guidance on what to look for when evaluating a property.

Landlord Cash Flow Analyzer $79.95 RentalSoftware.com LLC, www.rentalsoftware.com, 866/290-4183. Windows Excel-based solution for determining present value and return on investment from rental property. Functions include 20-year cash flow analysis, annual property operating data, and resale analysis by year of ownership. Play “what if” with numbers to determine how range of factors impact property value and return. Includes 15 standard reports, including an executive summary, in PDF format for printing or e-mailing. Company also offers Flipper and Rehabber Cash Flow Analyzer for short-term investment properties.

ROI Forecaster Standard Edition $99.95 download; $129.95 on CD Real Estate Informatics, www.realestateinformatics.com, 480/452-0981. Windows Excel add-on for investment and income analysis of commercial or residential properties. Includes 30-year projection of income, expenses, pre- and post-tax cash flow, equity, and resale value. Input variables for what-if return on investment analysis. Professional, advanced, and site license versions also available.

REA/L Estate Analysis Software $395 Roger Martin Company, www.rmartinco.com, 503/682-2419. Windows-compatible solution for use with Lotus 1-2-3 version 5 and later, or Excel version 5 and later. More than 40 worksheets for commercial and residential properties, including rent schedules, buy versus lease analysis, operating expenses, loan schedules and valuation, and exchange structuring. Ten-year cash flow projection investment summary, graphics, and what-if analysis to determine how different factors impact income and return. Residential worksheets for qualifying buyers, refinancing, rent versus buy, and seller’s net proceeds.

REI Wise Commercial $300/year or $25/month subscription fee REI Wise, www.reiwise.com, 866/473-4435. Web-based investment analysis software for projecting income and value of property from numbers entered through a Web browser. Comprehensive tools for lease analysis, resale valuation, sensitivity analysis, cash flow, and projected income before and after taxes. Converts data into reports for use in presentations or distribution as PDFs. Residential and lease analysis versions available. MarketEdge options create Web site for marketing investment property using REI Wise data and reports.

Real Estate Investment Analysis Standard $495 Real Data, www.realdata.com, 800/899-6060. Windows Excel add-on for investment and income analysis of commercial or residential properties. Boasts 20-year projections, including unit-by-unit operating expenses, cash flow, and resale analysis, partnership, and lease versus buy analysis. Annual property operating data worksheet for 23 line-item expenses. Includes 17 standard reports, generated as PDFs, for distribution. Mac version available.

planEASe $995 for base product Analytic Associates, www.planease.com, 800/959-3273. Windows-compatible commercial real estate investment analysis software. Comprehensive lease-by-lease analysis and income projections for multi-unit residential and commercial properties. Computes cash flow with internal rates of return, modified rates of return, and net present value, before and after taxes. Unlimited number of leases, expenses, or loans and a depreciation schedule for each property. Optional expansion modules for reports, graphics, financial utilities, monthly and quarterly cash flow reports, and partnerships. Price with all modules is $2,795.

ARGUS $4,075 basic configuration Realm Business Solutions, www.realm.com, 866/697-3256. Standalone Windows software for commercial real estate cash flow projection, transaction analysis, and asset valuation. Handles international investment projects with results translated to/from English, German, Spanish, or Japanese. Provides insight for developing leasing strategies, business and marketing plans, forecasting property values, and calculating the return on investment in a range of report formats. Includes tools for importing data from other software, including Excel.

Prices are the vendors’ suggested retail prices and are subject to change. This list isn’t comprehensive; NAR doesn’t evaluate or endorse these products and isn’t responsible for changes in company info.

REALTOR Benefits®)SM partners offer special pricing or services to NAR members. Find out more at REALTOR.org/realtorbenefits.