The Best Excel Alternative for Commercial Real Estate Investors Underwriting

When it comes to underwriting self-storage and multi-family investment properties, the industry standard has long been Excel. Excel templates, offer a familiar environment where investors can customize their analyses, build complex models, and create detailed projections. However, while Excel is powerful, it also comes with limitations that can make the underwriting process tedious, error-prone, and inaccessible to those without advanced spreadsheet skills.

Enter Cactus—a cutting-edge software solution designed to revolutionize the way investors underwrite and sell real estate investments. Cactus offers a streamlined, automated approach that makes the underwriting process faster, more accurate, and easier to manage. In this article, we will delve into a comparative analysis of using Excel vs. Cactus for underwriting self-storage and multi-family properties, highlighting the key differences, strengths, and weaknesses of each tool.

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1. Data Input and Extraction

Cactus:

• Automated Data Extraction: Cactus takes the hassle out of data entry by allowing users to drop documents like offering memorandums, appraisals, rent rolls, or T-12 cash flow statements directly into the platform. Cactus automatically extracts the relevant data and inputs it into the analysis fields, saving time and reducing errors.
• Guided Data Input: For those new to underwriting, Cactus offers step-by-step guidance through the Quick Analysis process, complete with video coaching and detailed explanations. This feature is particularly beneficial for newer investors or those unfamiliar with complex financial modeling.

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Excel:

• Manual Data Entry: With Excel, every piece of data—from the rent roll to the cash flow statement—must be manually inputted. This process is time-consuming and increases the risk of human error. If you're dealing with multiple documents, it can be challenging to ensure all data is correctly transcribed into your template.
• No Data Extraction: Excel doesn't offer automated data extraction. Investors must manually interpret and input data, which can lead to inconsistencies and errors, especially with complex or large datasets.

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2. KPI Monitoring and Sensitivity Analysis

Cactus:

• Dynamic KPIs: Cactus provides real-time updates to KPIs as you adjust different purchasing scenarios. This allows investors to instantly see the impact of their decisions on critical metrics like IRR and Cash on Cash Return. There's no need for complex formulas or advanced Excel skills—Cactus handles it all behind the scenes.
• Comprehensive Sensitivity Analysis: Cactus includes built-in sensitivity analysis tools, allowing users to see how changes in cap rates or NOI scenarios affect the project valuation. This feature enables investors to make informed decisions based on a range of potential outcomes, all within a few clicks.
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Excel:

1. Static KPIs: In Excel, key performance indicators (KPIs) such as IRR, Cash on Cash Return, and Equity Multiple need to be manually calculated or built into the template. While Excel templates can offer some dynamic features, they often require significant customization and advanced knowledge of Excel functions.
2. Limited Sensitivity Analysis: Conducting sensitivity analysis in Excel involves manually adjusting inputs and observing the resulting changes in KPIs. This process can be cumbersome and lacks the immediacy that modern software solutions provide.

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3. Ease of Use and Accessibility

Cactus:

• User-Friendly Interface: Cactus is designed with the user in mind. The platform is intuitive, with a clear, visual interface that simplifies the underwriting process. Even those with minimal experience in real estate finance can navigate the platform and produce accurate, professional analyses.
• Collaboration and Sharing: Cactus allows users to easily share their analyses with team members or clients. This collaborative feature is particularly useful for investors working in teams or those who need to present their findings to stakeholders.

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Excel:

• Steep Learning Curve: Excel is a powerful tool, but its complexity can be a barrier, especially for those without a background in finance or data analysis. Creating and maintaining an accurate underwriting model in Excel requires a deep understanding of the software and a high level of attention to detail.
• Customization vs. Usability: While Excel allows for extensive customization, this flexibility often comes at the cost of usability. Custom templates need to be built and maintained, which can be time-consuming and requires ongoing attention to ensure accuracy.

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4. Cost Considerations

Cactus:

• Subscription-Based Pricing: Cactus offers a subscription model at $175 per month for unlimited underwriting. While this represents an ongoing cost, the time savings and reduction in errors can quickly justify the expense, especially for active investors dealing with multiple deals.
• Value for Money: Considering the advanced features, automation, and ease of use that Cactus offers, the subscription cost is often outweighed by the benefits, particularly for those who frequently underwrite new deals.

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Excel:

• Low Upfront Cost: Excel is often included in office software packages, making it a low-cost option for investors. However, the hidden costs associated with building, maintaining, and potentially troubleshooting errors in complex models can add up over time.
• No Ongoing Fees: Once an Excel template is built, there are no ongoing subscription costs, which can be appealing to small investors or those working on a tight budget.

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5. Additional Features and Tools

Cactus:

• All-In-One Solution: Cactus includes a comprehensive set of tools tailored for real estate underwriting. From a purchase price sensitivity calculator to a built-in debt calculator, Cactus provides everything an investor needs to analyze a deal from start to finish—all within a single platform.
• Customizable LOIs: Cactus allows users to create and send customized Letters of Intent (LOIs) directly within the app. This feature streamlines the process of moving from analysis to offer, saving time and ensuring consistency across communications.

Excel:

• Limited Built-In Tools: While Excel can be customized to include various calculators and tools, this often requires significant effort. There are no built-in features for specific real estate calculations like debt schedules, purchase price sensitivity, or cash flow projections.
• Requires External Plugins: Investors may need to rely on external plugins or add-ons to perform specific real estate calculations, which can complicate the process and lead to compatibility issues.

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Conclusion: Why Cactus is the Superior Choice for Real Estate Underwriting

While Excel has been the go-to tool for real estate underwriting for years, it is increasingly being outpaced by modern software solutions like Cactus. The key advantages of Cactus—automated data extraction, dynamic KPI monitoring, ease of use, and comprehensive tools—make it a powerful alternative to Excel.

For investors who value efficiency, accuracy, and a user-friendly experience, Cactus is an investment worth making. The ability to quickly analyze deals, visualize data, and collaborate with ease gives Cactus a significant edge over traditional Excel templates. At $175 per month, Cactus provides immense value, especially for active investors looking to streamline their underwriting process.

To fully appreciate the power of Cactus, try it for yourself and experience how it transforms the underwriting process. Whether you're a seasoned investor or just starting out, Cactus offers the tools you need to make informed, profitable investment decisions with confidence.