What is cash flow valuation?
Cash flow valuation is a powerful tool for analysing a property's cash flows over time. The tool is built on models, where each model is a prediction of the future initialised with our best estimate based on property and market data.
You can create a valuation for a single property or several properties from your Pipeline board.
Use of market data from Newsec
Market data from Newsec (rent, yield, vacancy and operating and maintenance costs) may not be used in connection with rent negotiations or other legal proceedings.
Two versions of the model
Kliva currently has two versions of the cash flow model: v1.0 and v2.0 (Beta). You can see which version you are in at the top right of the Cash flow valuation view, next to Create new model. In v1.0 the button reads Switch to v2.0 (Beta), and in v2.0 you switch back via Switch to v1.0.
You can switch version whenever you like. Always check which version you are in before you create a new model.
The content of this article applies to both versions in principle. A more in-depth walkthrough of v2.0 will follow later.
Getting Started
Each model consists of one or more premises types, where each premises type represents a part of the property. The model is filled as far as possible with default values from Kliva, Forum and Newsec, so that you have a reasonable starting point before you even begin adjusting.
More about where the values come from can be found in Data Sources & Data Security.
Under insights you get a collected overview of the valuation and the assumptions it is built on — market value, yield and net operating income, together with a summary of the model's contents.
The value is calculated with a DCF model (Discounted Cash Flow): the property's cash flows are projected over the model period and discounted to a present value. At the end of the period an exit value is calculated based on the long-term yield, which also forms the basis for the model's discount rate. The model's assumptions are modular — including the model horizon. Read more about how the value is determined.
Cost and rent indexation is initialised to 2 % in line with the Riksbank's long-term inflation target, but can be changed by you.
Beyond the ongoing assumptions you can build different scenarios and add items the model does not otherwise capture — for example CAPEX & adjustments and credits. Leverage affects the leveraged cash flow after debt and the key figures tied to it, but not the market value itself — that is calculated unleveraged based on the net operating income.
You can fill the model manually, but it is usually quicker to import data — from Excel with AI support or directly via an integration.
Export
The entire model can be exported to Excel. Either as a full-scale model, where every link reflects how the valuation is done in the service, or a summary that gives you a quick overview of the figures.
Would you like a closer walkthrough?
You are warmly welcome to reach out in the support chat or at [email protected] and we will help you further.
Read More
Would you like to continue learning? Here you will find additional articles to guide you further:
Introduction to the Pipeline system.
About Cash Flow After Debt
Commercial properties and lease agreements
About Credits
How we calculate rental income