Mortgage Equity Capitalization

Mortgage Equity Analysis - Discounted Cash Flow

The Capitalization Templates available for download to your computer will allow you to select the mortgage terms and equity yield for the valuation of the net operating income you wish to value and print out a detailed report of the analysis. These templates are designed to allow you to change any terms you wish and instantly see the result. These templates produce the estimated value of the cash flows over any holding period and at whatever terms you wish. You have complete control of the input. These templates are designed to be used in Excel. You can insert the expected inflation/deflation rate over the holding period, adjust the mortgage terms, equity terms and equity return as you wish and the spreadsheet templates produce the estimated value of the cash flows over the selected holding period. There are three separate cash flow templates that include the valuation models for Ellwood without Algebra, Valuation using a J-Factor adjustment to the capitalization rate and Valuation using a K-Factor adjustment to the Capitalization Rate. Ellwood Capitalization of the net income assumes a fixed percentage annual increase in the cash flows over the holding period. The J-Factor Method assumes that cash flows are irregular over the holding period and attempts to average the change in income over the holding period. The K-Factor Method assumes the cash flows are changing at a constant ratio. All three methods will produce different values using the same input of mortgage and equity assumptions and using the same first years net operating income.

These templates also calculate mortgage underwriting aids that include; debt coverage ratio analysis, mortgage balance at the end of the holding period, development of the overall capitalization rate, cash on cash return, sinking fund factor, mortgage constant, % paid off at the end of the holding period, the weighted rate, basic rate, internal rate of return and the equity dividend rate based on the investment and mortgage assumptions.

These templates are designed for use by real estate appraisers, mortgage portfolio managers, loan officers, mortgage underwriters, appraisal students, real estate investors and real estate professionals involved with commercial and industrial real estate.

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