Cost_Benefit_Analysis - FINAL.xlsx

	B	I	K	M	O	P	Q	S	U
1
2	Cost Benefit Analysis
3
4	NOTE: You will not know the exact costs of all these items before purchasing the investment property. Use this tool to estimate and track expected costs and compare them against the expected benefits listed below.
5	The spreadsheet has formulas to calculate totals for you. Use the different worksheets to compare each property. We have put in some estimated values to get you started
6	Project	ProjectManager				Date
7	[Name of Project]	[Name of Project Manager]				[Date Revised]
8
9	Quantitative Costs
10	Direct Costs	First Year	Second Year	Third Year	Fourth Year		Fifth Year	Sixth Year	Total
11	Purchase Price	$250,000	$0	$0	$0		$0	$0	$250,000
12	Closing Costs	$10,000	$0	$0	$0		$0	$0	$10,000
13	Carrying Costs During Renovations	$6,000	$	$	$		$	$	$6,000
14	Renovation Costs	$50,000	$	$	$		$	$	$50,000
15	Your time and labour	$25,000	$	$	$		$	$	$25,000
16	Total	$ 341,000.00	$ -	$ -	$ -		$ -	$ -	$ 341,000.00
17
18	Intangible Costs	First Year	Second Year	Third Year	Fourth Year		Fifth Year	Sixth Year	Total
19	Property Depreciation (average 1% of purchase price per year)	$250	$250	$250	$250		$250	$250	$1,500
20	Tenant Turnover (cost is often 1 - 2 months rent, not every year)	$0	$1,500	$0	$1,500		$0	$1,500	$4,500
21	Legal and Liability Risks	$	$	$	$		$	$	$0
22	Market Volatility (costs incurred is the market turns)	$	$	$	$		$	$	$0
23	Stress and Uncertainty (Health bills, prescriptions, gym membership)	$	$	$	$		$	$	$0
24	Total	$ 250.00	$ 1,750.00	$ 250.00	$ 1,750.00		$ 250.00	$ 1,750.00	$ 6,000.00
25
26	Opportunity Costs	First Year	Second Year	Third Year	Fourth Year		Fifth Year	Sixth Year	Total
27	Selecting one project over another	$0	$0	$0	$0		$0	$0	$0
28		$	$	$	$		$	$	$0
29	Total	$ -	$ -	$ -	$ -		$ -	$ -	$ -
30
31	Overall Costs	$ 341,250.00	$ 1,750.00	$ 250.00	$ 1,750.00		$ 250.00	$ 1,750.00	$ 347,000.00
32
33	Quantitative Benefits
34	Direct Benefits	First Year	Second Year	Third Year	Fourth Year		Fifth Year	Sixth Year	Total
35	Rent Collected Per Year	$10,000	$10,000	$15,000	$15,000		20000	$20,000	$90,000
36	Property Appreciation (often 3-5% per year)	$5,000	$6,000	$7,000	$8,000		$9,000	$10,000	$45,000
37	Resale value (its recommended to keep a property for a least 5 years)	$	$	$	$		$ 287,500.00	$	$287,500
38		$	$	$	$		$	$	$0
39		$	$	$	$		$	$	$0
40	Total	$ 15,000.00	$ 11,750.00	$ 22,000.00	$ 23,000.00		$ 316,500.00	$ 30,000.00	$ 418,250.00
41
42	Indirect Benefits	First Year	Second Year	Third Year	Fourth Year		Fifth Year	Sixth Year	Total
43	Tax Savings	$3,000	$4,000	$5,000	$6,000		$7,000	$8,000	$33,000
44	Provides income and collateral for future purchases/loans	$0	$	$	$		50000	$	$50,000
45	Semi-passive income	$	$	$	$		$	$	$0
46	Investment portfolio diversification	$	$	$	$		$	$	$0
47	Legacy and Generational Wealth	$	$	$	$		$	$	$0
48		$	$	$	$		$	$	$0
49		$	$	$	$		$	$	$0
50	Total	$ 3,000.00	$4,000	$ 5,000.00	$ 6,000.00		$ 57,000.00	$ 8,000.00	$ 83,000.00
51
52	Intangible Benefits	First Year	Second Year	Third Year	Fourth Year		Fifth Year	Sixth Year	Total
53	Sense of control and flexibility (options) with ownership of a hard asset	$0	$0	$0	$0		$0	$0	$0
54		$	$	$	$		$	$	$0
55		$	$	$	$		$	$	$0
56		$	$	$	$		$	$	$0
57		$	$	$	$		$	$	$0
58	Total	$ -	$0	$ -	$ -		$ -	$ -	$ -
59
60	Competitive Benefits	First Year	Second Year	Third Year	Fourth Year		Fifth Year	Sixth Year	Total
61	Can charge more for a property that is renovated to suit the clientele	$1,000	$1,001	$1,002	$1,003		$1,004	$1,005	$6,015
62		$	$	$	$		$	$	$0
63		$	$	$	$		$	$	$0
64		$	$	$	$		$	$	$0
65		$	$	$	$		$	$	$0
66	Total	$ 1,000.00	$1,001	$ 1,002.00	$ 1,003.00		$ 1,004.00	$ 1,005.00	$ 6,015.00
67
68	Overall Benefits	$ 19,000.00	$ 16,751.00	$ 28,002.00	$ 30,003.00		$ 374,504.00	$ 39,005.00	$ 507,265.00
69	Cost VS Benefits (Benefits minus the Costs)	$ -	$ -	$ -	$ -		$ -	$ -	$ 160,265.00
70	NOTE: If the final number is a positive value (after 5 years of holding the property), than it's likely the investment will perform well in future, based on the assumptions you made while inputting the data.
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