Resale Value

Resale calculations are located on the bottom-right corner of the main DCF sheet. There is a link to this section under the Discounted Cash Flow tab.

Resale value is estimated by capitalizing the NOI for the year following the holding period. For example, if the holding period is five years, the sixth year NOI is capitalized. The cap rate formula is: Sale Price/NOI = Cap Rate. In the case of value, it is NOI/Cap Rate = Value. Also, see the Narrative1 Cap Rate Tools.

The cap rate is increased or decreased by .1%, .25%, .5% or 1%. Or, to enter a different rate, check the checkbox and enter a rate directly. Note the summary of values and rates of change. These indicators are helpful for keeping an eye on total value change over the holding period so one can assess the reasonableness of the estimated resale value.

The resale expense (commission, taxes, legal, etc.) is calculated as a percentage of the sale price.