Scattered Site Rental Toolkit:

Business Planning for Development & Management

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Management

VI.A. Financial Feasibility Analysis

For many nonprofit operating SSR portfolios, simply breaking even is considered success. If your SSR portfolio can cover operating costs (including staff), debt service, and fund reserves for future improvements, that may be acceptable. Earning cash flow beyond the break-even point necessitates carrying little or no permanent debt, which is difficult to do.

Begin analyzing the financial feasibility of your Scattered Site Rental (SSR) project by completing the SSR Development Proforma Template provided in this Toolkit. This proforma is a set of integrated Excel worksheets essential to determining the feasibility of developing and operating a SSR project. It also allows you to quickly analyze the effect changes to your project have on feasibility. We have also provided an Example SSR Development Proforma to help orient you to the template.

Start drafting a development proforma as soon as you start conceptualizing your project! Early numbers will be rough estimates, but they will get refined over and over as you get more accurate information about rents, units, and costs. The following table explains the seven worksheets you will need to fill out and analyze.

Components of the Scattered Site Rental Development Proforma Template

Worksheet

Purpose

1) Summary

      Summary of key project info from other worksheets

      Shows sources of permanent financing and funding (mortgage, tax credit equity, HOME) so Sources equal Uses.

2) Revenue

      Shows specific unit information, rents, utility allowances

      Estimates Non-Rental Income

      Calculates Gross Rental Income

3) Operating Budget

      Shows detailed annual operating costs for individual units and/or overall project

      Shows assumptions for vacancy rate and Debt Coverage Ratio

      Calculates Adjusted Gross Income

      Calculates Net Operating Income

      Calculates potential mortgage and shows actual mortgage

4) Operating Cash Flow

      Shows annual revenue and expenses for 20 years

      Calculates annual Net Operating Income (NOI), Debt Coverage Ratio, and Net Cash Flow

      If Net Cash Flow is negative, calculates the necessary Operating Deficit Reserve

5) Development Budget

Calculates Total Development Costs

6) Construction Budget

Calculates total construction costs

7) Construction Cash Flow

Charts & calculates effect of:

      Construction Cost Expenditures

      Timing of Subsidies, Equity, Permanent Loan, etc.

      Balance, draws, pay down and interest on construction Loan

 

Next: VI.B. Fitting the Funding to the Project

Next: SSR Development Proforma Example (Excel)

Next: SSR Development Proforma Template (Excel)