Sensitivity analysis involves changing one variable at a time over a possible range of outcomes to evaluate the effect of that change, allowing the real estate analyst to review each variable’s impact upon the investment property’s present value and rates of return.
ProAPODĀ® includes three sensitivity analysis options: Price Sensitivity, Down Payment Sensitivity, and Loan-to-Value. In each case, our real estate investing software calculates and recalculates a range of variables quickly based upon the specific variable desired by the user and in turn creates the report displaying that range along with the appropriate measure and return for that variable.
The user, for instance, might want to see what the impact upon cap rate is based on a range of property prices, or upon cash on cash return based on a range of down payments, or upon monthly mortgage payment based on a range of loan amounts and interest rates.
ProAPODĀ® real estate investment software makes it very easy.
First, enter enough data about the investment property for our software to compute a “starting point” in the sensitivity analysis. Property price, income and expenses, and loan information, for instance, must all be entered beforehand; once an APOD is created (for example) our software will have enough information to make the dozens of computations required for you to do a comprehensive sensitivity analysis.
Secondly, merely make an entry in the proper form for the variable you would like to change. You will find this form in Loan Info under the heading “Sensitivity Analysis” where, in each case, you are asked to submit an amount you would like to “step” the variable. Bear in mind, our real estate software creates a “range” of values both higher and lower then the starting point, and the “step” merely instructs our software the increment you want to use.
You are now ready to preview the report or print it for your presentation. It’s that easy.
If you are currently using ProAPODĀ® Real Estate Investment Software you are encouraged to take advantage of our sensitivity analysis feature. The reports created are extremely easy to read and provide a wealth of helpful data rental property sellers and buyers can use to make investment decisions quickly.
