• I’m going to begin by showing you the basics of creating a table in Excel. And then later on we will get into more advanced applications using Excel.

• If you had the choice of looking at this…….

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• Or something like this, which would you prefer?

• Never mind the data in the grids for now, but which one is easier to read? The black and white one or the one with alternating colors on the rows?

• The one with color, right?

• Well, I will show you how to create something like that.

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• You begin by highlighting the number of columns and rows you need. Keep in mind you can always add more columns or rows later.

• At first you simply want to highlight some columns and rows.

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• Next you click on the Insert tab and select table. A pop-up will ask you if your table had headers, and you should click in the box and it will include headers in the table.

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•Once you click okay, this table appears in your worksheet.

• You can format this table however you want. I personally like orange and white rows, but you change the table to what works best for you.

• Additionally, you can customize each cell using the format cell feature.

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• So you can see how easy it is to read a table like this one as opposed to a black and white table.

• So now you have your table, but how many of you hate typos? Let’s focus on the zoning column for a second.

• One way to avoid typos is by using drop down lists. Drop down lists are really easy to make, and you can have some fun with it if you want to.

• Allow me to demonstrate.

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• To create a drop down list, first you have to go to a blank worksheet and design the allowable responses.

• As you can see, I have created various zoning codes, and I have highlighted the list.

• Once you highlight the list, you click up where you see the yellow callout, and name the highlighted fields. In this case, it is named zoning. Once you name it, you hit enter, and that data set is known as zoning.

• Next you highlight the cells on the table that you want to apply this drop down list to. 7

• Once you highlight the cells, you click on data validation. A box opens, and you select list under “allow” and under “source” you enter =zoning and click okay.

• Now there will be a drop down list for each of these cells.

• You can restrict it to just those responses and set up an error message that will pop up if you type the wrong thing in the cell. And you can customize the message. Like this.

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• If you can’t read the error message, it says “HEY BLOCKHEAD THAT IS NOT A VALID RESPONSE”.

• Of course, you may not want to put that on a spreadsheet you are planning to email to someone outside the office, or in the office perhaps.

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• Here’s another error message. It reads “HEY WOODY JUST BECAUSE YOU ARE A COWBOYS’ FAN DOESN’T MEAN YOU CAN PUT ANYTHING YOU WANT IN THIS FIELD”.

• There’s no reason you can’t have a little fun while you work.

• Additionally, if you look at the top of the columns, you will see drop down arrows.

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• You can filter the table by simply clicking on the arrow and checking the criteria you want to see.

• If for instance you want to see all the “R” zoned properties, simply click just them in the drop down list.

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• It will then only display the ones you filtered, and there will be a filter icon letting you know that you are only seeing a portion of the list.

• To un-filter, simply click on the filter icon and click “Select All” and “Ok”, and the entire list is displayed.

• Continuing with this table, let’s say you wanted to know how many of the sales were zones O1, you can use a formula for calculating that.

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• You go to the formulas tab and select more functions and scroll down to countif.

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• Once you click countif, a box like this pops up and you select the range of cells you want to search from.

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• In this case, we are searching the zoning column.

• Next you enter the criteria.

• We are looking for O1 zoning, so we enter =O1 in the criteria blank and click ok.

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• The result is 3 sales that are zoned O1.

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• If you want to know all of the sales zoned office, you simply do it for each “O” zoning code, and then sum it.

• In this case we have 7 sales zoned with O1, O2, or O3.

• For 23 sales this might not be necessary, but if you have all the sales in the city in this table, it really can come in handy, as does the filter function.

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• Let’s say you want to know how many sales are greater than or equal to $700,000. You use the same countiffunction, select the range of cells to search and type “>=700000” in the criteria blank.

• It comes back with a result of 15.

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• An entire class could be taught just on using formulas in Excel, but this gives you some ideas as to how Excel formulas can help you in your everyday work.

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• I want to show you one more example of using Excel for assessment purposes.

• How many of you perform sales ratio studies?

• We try to look at sales throughout the city every month. The appraisers send them to me, and I group them altogether in one spreadsheet.

• Perhaps if you have a CAMA system, it does this for you, but we don’t currently have a CAMA system. We should have one soon, but for now, we use good ole’ Excel.

• Let me reemphasize, this is not factual data. These are 20

• In this example, we have a month of sales sorted by date.

• Using various formulas, the template calculates the mean, median, standard deviation, coefficient of variation, coefficient of dispersion, the weighted mean, and the price-related differential.

• A lot of this can probably be automatically calculated in your CAMA system, but for those of us who do not currently have such a system, this works pretty well.

• So we calculate those various components on a monthly basis to gauge where were are throughout the year. We also perform a quarterly calculation.

• Once a quarter of sales have been verified, then we graph the 21

• Here is an example of a quarterly sales ratio scatter chart.

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• Here is an example of a year to date sales ratio scatter chart.

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• An of course, there are numerous charts and graphs that you can design, like this one.

• Here is an example of a polygon graph for trending cap rates.

• I need to disclose that these cap rates are not factual data. This is for example purposes only.

• When you get into graphing, you can get really creative with customization. You could spend an hour on just one graph.

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• This is simply a graph of cap rates from 2009/2010.

• BREAK!!!

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• The six functions of a dollar provides a basic framework that can be expanded as you get deeper into income analysis.

• This seminar is more of an overview of different things you can do in Excel, but if you really want to unlock the power of Excel, enrolling in a hands on Excel class would tremendously benefit you.

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• So we begin with the future worth of a dollar. What is the future worth of $1 over a 10-year period at 9% interest?

• The yellow cells are the input cells and the green cells display the solution.

• Using an Excel designed formula for Future Value (FV), I have developed a template to calculate the future value of $1. You can put any or any amount in the template.

Once the template is created, the user simply inputs three data entries (yellow tabs), and the solution is automatically calculated. 27

If you want to know the future worth of $1,000 over 10 years at 9% interest, simply input the known variables, and the solution automatically appears, which in this case is $2,367.36

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• What is the future worth of $1 per period over 10 years at 9% interest?

• Again, using an Excel designed formula in the green cell, it calculates the future value of $1 per period over 10 years at a 9% interest rate.

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• So let’s say you want to know the future worth of $1,000 per year over 10 years at 9% interest, simply input the known variables, and the solution automatically appears, which in this case is $15,192.93

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• A sinking fund factor is the amount of money an investor needs to “sink” into a fund to pay for a future project or expense.

• At a 9% interest rate, an investor would need to sink 7 cents into a fund per year for every dollar needed at the end of 10 years.

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If an investor needs $1,000 at the end of 10 years, and they can sink it in a fund that earns 9% annual interest, they would need to deposit $65.82 every year.

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• What is the present worth of a dollar received in 10 years based on a 9% discount rate?

• Using a Present Value formula (PV), the present worth of $1 received in 10 years at a 9% discount rate is 42 cents.

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• If you expected to receive $1,000 ten years from now, the present value at a 9% discount rate is $422.41

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• What is the present worth of a dollar received every year for 10 years based on a 9% discount rate?

• The present worth of $1 received every year for 10 years at a 9% discount rate is $6.42

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• So if you expected to receive $1,000 every year for 10 years, the present value at a 9% discount rate is $6,417.66

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• If a dollar is invested today, how much annual return will be received at 9% with a 10-year maturity date?

• Using a Payment formula in Excel (PMT), the annual return is 16 cents.

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So if $1,000 is invested with an annual interest rate of 9% maturing in 10 years, the annuity is $155.82

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• And that is a brief example of the six functions of a dollar using a simple Excel template.

•Excel is a powerful tool that can be used for income analysis.

• The six functions of a dollar provides a basic framework that can be expanded as you get deeper into income analysis.

• If you really want to unlock the power of Excel, enrolling in a hands on Excel class would tremendously benefit you.

• Staying on the topic of income analysis, I want to show you a basic discounted cash flow that can be set up in Excel. Once the template is created, it’s simply a matter of the user inputting some data, and Excel does the rest.

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• Discounted cash flow is not used in real estate assessment; however, many fee appraisers use it when valuing a property that has multiple year leases.

• If you wanted to estimate the value of a property with multiple year leases, you could set up a template in excel that will calculate a present value using the discounted cash flow method (DCF)

• On the next slide is a DCF template, and with a few inputs from the user, it will calculate a present value.

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• Using this template, all the user has to do is input the data in the yellow cells, and the present value is automatically calculated.

• I will not get into advanced income capitalization theory, as this is outside the scope of this seminar, but I will show you the user inputted data points and a completed DCF.

• The first thing the user inputs some property data and assumptions.

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• So the user inputs the net leasable area and the market rental rate.

• The user also inputs the vacancy & collection loss, the income growth rate and the expense growth rate.

• Then they input the going in cap rate, the terminal cap rate, the discount rate, and the sales costs.

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• Next, the user inputs the reimbursable and non-reimbursable expenses.

• Once all these inputs are completed, Excel calculates the present value of the property.

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• In this example, the indicated value of the 25,000 square foot property is a little over $1.3 million or roughly $52 per square foot.

• Using this same template, the analyst can tweak the inputs and the indicated value is automatically adjusted.

• Let’s say the going in cap rate needs to go up 25 basis points, and the terminal cap rate needs to go up 25 basis points.

• The user simply makes these changes, and the indicated value is automatically recalculated.

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•Now, the indicated value of the 25,000 square foot property is a little below $1.3 million or roughly $51 per square foot.

• Using Excel, the hardest part is creating the template, but once it is created, it makes life much easier.

• While creating a template like this might seem complicated, once you understand Excel fundamentals, you will be surprised how easy it is.

• When I first started working with Excel, it was intimidating, but now I can’t believe how easy it has become to me.

• I want to move on to one more income analysis template that most people understand (direct capitalization), and then I am going to show you some other features in Excel. that can help you out on a daily basis.

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•Most assessors’ office uses direct capitalization for performing an analysis on income producing properties.

• On the next slide, we have a 15-unit property with a grid showing the annual rents.

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• So here are 15 units of varying sizes in a property.

• There appears to be one anchor unit of over 17,000 square feet.

•Keep in mind, all the numbers are made up.

• The total PGI is over $700,000.

• On the next page is a sample income and expense statement.

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•Excel can be used to calculate the different components of income and expenses and estimate net operating income.

• The total NOI is in this example is around $631,000.

• Next you need to capitalize the income using a loaded cap rate to come up with an indicated assessment value.

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• This is a simple template for valuing the property with a loaded capitalization rate.

• Again these numbers are made up.

• Loading the cap rate with the tax rate (1.10% for the City of Newport News), the indicated value is $6,441,000 rounded.

• As you have probably noticed, I like adding color to my excel spreadsheets.

• Beyond what you have learned today, there are some things you can do with Excel outside of analysis and spreadsheets .

• For example, you can paste a photo in Excel and add captioning to it by using “callouts”.

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• Here I am expressing my wish to be on a beach in Maui.

• Anyone else want to be in Maui right now?

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• A more practical example, say you wanted to show where the mall is in relation to the interstate. Since a picture is worth a thousand words, you simply copy an aerial photograph into Excel and then use callouts to label the photo.

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• Here is an example of an aerial photo that has been labeled with the different stores of a shopping center.

• I’m sure you can do this in other photography programs, but it is simple to do in Excel.

• Simply go to the insert tab and select shapes. There are a plethora of shapes that can be used to label photographs or anything else.

• Finally, I close with this:

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