The Renovation Planner
Plan an interior renovation program unit type by unit type: what it costs including the rent lost while units are down, when it pays back, and what it adds to value.
Every figure here is invented.
The Units
A row per unit type. Units to renovate can be fewer than the units of that type; a type with 0 to renovate is skipped.
| Unit Type | Units | Current Rent a Month | Units to Renovate | Premium a Month | Cost per Unit | |
|---|---|---|---|---|---|---|
| All types |
Build the Costs From Line Items
While this is open, each cost per unit above is the sum of its lines here. Close it to type the costs directly again.
Return on all-in cost
By Unit Type
Per unit. The all-in cost is the invoice with contingency plus the rent the unit does not collect while it is down and leasing back up.
| Unit Type | Renovated | Cost With Contingency | Rent Lost | All-In | Net Premium a Year | Return on Cost | Payback, Months | Value Created | Runs |
|---|
The Program
Cost
Income and Value
The Ramp
The Figures
| Month | Units Leased, to Date | Premium Earned |
|---|
The Cash Curve
The Figures
| End of Year | Cumulative Net |
|---|
Return on Cost by Type
The Figures
| Unit Type | Return on Cost | Value Created a Unit |
|---|
Sensitivity
Return on all-in cost for the whole program when the premiums land above or below plan, and when the extra downtime runs shorter or longer. The navy figure is the run above.
By Year
The Monthly Schedule
Every unit is followed through fractional months: a unit started in a month is offline from the start of that month for the months lost, then earns its net premium.
| Month | Started | Leased | Leased, to Date | Spend | Rent Lost | Premium Earned | Net | Cumulative Net |
|---|
How It Works
Weeks become months at weeks × 7 ÷ 30.4375, 30.4375 being the days in an average month. The months each renovated unit loses are L = (extra downtime + extra lease-up) × 7 ÷ 30.4375. At 3 weeks down and 2 weeks to lease, L is 1.15 months.
Extra means beyond a normal turn. A unit that would have sat vacant for 3 weeks between tenants anyway only loses the weeks the renovation adds, so count those and nothing else.
Per unit: all-in = cost × (1 + contingency) + current rent × L, net premium = premium × 12 × (1 − vacancy), return on cost = net premium ÷ all-in, payback in months = all-in ÷ (net premium ÷ 12) and value created = net premium ÷ cap − all-in.
The program adds the types up by the units renovated, plus any common area spend, which counts in the first month of the program with no contingency on top. A premium credited to the common area is earned on every unit from the month after.
The schedule starts the chosen number of units each month in the chosen order. Highest return runs the types by return on cost, best first, ties in table order; proportional mixes the types in the ratio of their counts. A unit started in month m spends its cost with contingency in month m, loses its current rent for the part of each month that falls inside [m − 1, m − 1 + L], and earns its net premium for the rest. The payback month is the month the cumulative net turns 0 or more and stays there.
Downtime belongs in the cost because it is cash the property does not collect, and it scales with the pace of the program in a way the invoice does not.
The common mistake is quoting the return on the invoice. At the inputs this page opens with, the rent lost while units are down adds $265,971 to a $1,644,300 spend, and the return falls from 16.76% on the invoice to 14.43% all in.
Downloads
The workbook keeps the inputs on their own sheet and rebuilds every figure from them with live formulas, the page's figures set beside them as a check.
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The other tools · The Underwriting Model · Debt Sizing and Refinance · Lease Economics · All of them