Real Estate Financial Modeling: Basics To Expert Case Study

Real estate skills with hands-on modeling skills, in-depth property valuation techniques, and dynamic case studies.

What you'll learn

Understand the basic concepts and terminology of real estate. Identify different types of real estate and their characteristics (residential, commercial, land).

Analyze the real estate market and recognize opportunities. Evaluate factors influencing supply and demand in the real estate sector.

Apply real estate valuation methods, including discounted cash flow (DCF) analysis and the Percentage of Completion method.

Understand the cost components associated with real estate properties.

Identify and evaluate risks associated with real estate investments for both lenders and borrowers.

Analyze liquidity risks and factors affecting the valuation of properties.

Calculate lease rentals and understand the concept of terminal value.

Analyze cash flows for debt service and understand the debt service coverage ratio (DSCR).

Engage in case studies to apply theoretical concepts to real-world scenarios.

Understand the implications of upfront and deferred collections in real estate financing.

Utilize key financial metrics such as EBITDA and IRR for investment analysis. Conduct cash flow analyses for equity investors.

Employ comparable transaction methods to assess property value. Analyze demographic data and market conditions for investment decisions.

Requirements

Basic Understanding of Real Estate Concepts

A basic understanding of mathematics, including algebra and statistics, is necessary for financial calculations and modeling.

Proficiency in Microsoft Excel or similar spreadsheet software is required, as the course involves extensive use of spreadsheets for modeling and analysis.

Description

Real estate finance can be complex, but mastering it is essential for anyone aiming to work in real estate investment, development, or finance. This comprehensive course offers a deep dive into real estate modeling, starting from basic concepts and moving through advanced financial techniques. By the end of the course, you’ll gain not only a strong understanding of real estate fundamentals but also the ability to construct sophisticated financial models for various types of real estate projects.Section 1: IntroductionThis section introduces you to real estate modeling, laying the groundwork for understanding how real estate investments are structured and analyzed. You’ll become familiar with the key objectives and skills required to succeed in this field, preparing you for the hands-on techniques and models covered throughout the course.Section 2: Concepts of Real EstateIn this section, we delve into core real estate concepts, including the divisions in real estate, market dynamics, and various property types. From residential and commercial real estate to the risks associated with lenders and borrowers, you’ll gain a solid understanding of the factors that influence property demand, valuation, and investment risk. Additionally, this section covers the construction stages, property types, and risk assessments vital for informed decision-making in real estate.Section 3: ValuationReal estate valuation is fundamental to investment decisions. This section covers essential valuation techniques and introduces various sources of funding, helping you understand how properties are appraised and financed. By the end of this section, you’ll be able to assess a property’s market value using professional methodologies.Section 4: Lease Rental DiscountingThis section teaches lease rental discounting, a crucial aspect of income-generating properties. You’ll learn about terminal value, calculate lease rentals, and analyze profit and loss accounts to determine a property’s financial viability. Techniques like DSCR (Debt Service Coverage Ratio) are also covered, ensuring that you can measure the property’s ability to cover debt obligations.Section 5: Percentage of Completion MethodIn this section, you’ll explore the Percentage of Completion Method, a key approach for evaluating projects under construction. Topics covered include cost allocation, promoters' contributions, interest during construction, and EBITDA calculations. You’ll gain skills in assessing project progress, capital interest, and soft costs, which are all essential for determining project profitability.Section 6: Loan Against Property ModelUnderstanding loan structures is vital for real estate financing. This section covers loan-against-property models, including calculating property value, evaluating loan rates, and understanding term loans. You’ll also learn how to assess project costs, making you adept at creating financing structures that support successful real estate developments.Section 7: Case StudyIn this case study section, you’ll apply your knowledge to real-world examples. Through projects like the Lyric Apartment case study, you’ll work with unit mixes, demographics, and comparable transactions, and calculate cash flows to equity investors. This hands-on experience is invaluable for translating theoretical knowledge into practical investment analysis.Section 8: Case Study on LRIC REPEThis section explores advanced real estate private equity (REPE) case studies, focusing on valuation methods like multiples and perpetuity growth. You’ll learn about exit cap rates, real estate market descriptions, and opportunistic investment strategies, gaining insight into the assessment of high-yield investment opportunities.Section 9: Case Study on Real Estate ModelingIn the final section, we focus on a comprehensive real estate modeling case study. You’ll compare properties, evaluate investment analysis models, and calculate interest coverage ratios. This final case study cements your learning, providing you with the skills and confidence to tackle real-world real estate projects independently.ConclusionUpon completing this course, you’ll have a strong command of real estate modeling, valuation, and financial analysis. From assessing market opportunities to performing complex cash flow and IRR calculations, you’ll be ready to excel in real estate finance. Equipped with practical skills and case study experience, you’ll be well-prepared to make strategic real estate investment decisions, whether you’re a professional in the industry or a newcomer looking to build expertise.

Overview

Section 1: Introduction

Lecture 1 Introduction to Real Estate Modelling

Section 2: Concepts of Real Estate

Lecture 2 Division in Real Estate

Lecture 3 Real Estate Market

Lecture 4 Opportunities in Real Estate

Lecture 5 Residential Real Estate

Lecture 6 Commercial Real Estate

Lecture 7 Categories of Commercial RE

Lecture 8 Types of Land Properties

Lecture 9 Cost of a Property

Lecture 10 Risk Associated Lender

Lecture 11 Risk Associated Borrower

Lecture 12 Liquidity Risk

Lecture 13 Construction Stages

Lecture 14 Green Field Properties

Lecture 15 Demand for the Project

Lecture 16 Evaluating Developer Questionnaire

Lecture 17 Examining Developer Questionnaire

Lecture 18 Law of Demand

Lecture 19 Law of Supply

Lecture 20 Factors Affecting the Valuation

Lecture 21 Factors for Demand

Lecture 22 Disposable Income and Availability of Land

Lecture 23 Affecting Supply Factors

Lecture 24 Expectations of Customers

Section 3: Valuation

Lecture 25 Real Estate Valuation

Lecture 26 Sources of Funds

Section 4: Lease rental Discounting

Lecture 27 Concept of Terminal Value

Lecture 28 Total Constructed Area

Lecture 29 Building Lease Rentals

Lecture 30 Calculating the Numerator

Lecture 31 Profit and Loss Account

Lecture 32 Calculating the Expenses

Lecture 33 Analyzing the SLM Method

Lecture 34 Cashflow for Debt Service

Lecture 35 Understanding DSCR Ratio

Lecture 36 Calculating DSCR Sheet

Section 5: Percentage of Completion Method

Lecture 37 Percentage of Completion Method

Lecture 38 Calculating the Measurement

Lecture 39 Total Built up Area

Lecture 40 Valuation on Project Cost

Lecture 41 Breakup of Construction Cost

Lecture 42 Percentage of Completion

Lecture 43 Quarters in Promoters Contribution

Lecture 44 Allocation of Soft Cost

Lecture 45 Calculating the Share Capital

Lecture 46 Year Wise Promoters Contribution

Lecture 47 Drawdown and Quarterly Constructions

Lecture 48 Interest During Construction

Lecture 49 Calculating Interest During Construction

Lecture 50 Calculating Capital Interest

Lecture 51 Soft Cost during Construction

Lecture 52 Calculating Marketing Expenditure

Lecture 53 Calculating Operating Expenditure

Lecture 54 Income from the Project

Lecture 55 Calculating the EBIDTA

Lecture 56 Calculating Secured Loans

Lecture 57 Sum of Total Assets

Lecture 58 Decrease in Advance Against Sales

Lecture 59 IRR Calculations

Section 6: Laon Against Property Model

Lecture 60 Loan against Property

Lecture 61 Calculating Value of the Property

Lecture 62 Example on Loan Against Property Model

Lecture 63 Evaluating Rate Per Sq Feet

Lecture 64 Upfront and Deferred Collection

Lecture 65 Existing and New Term Loan

Lecture 66 Total Project Cost

Section 7: Case Study

Lecture 67 Case Study on Lyric Apartment

Lecture 68 Types of RE PE Cases

Lecture 69 Investment Analyst Case Study

Lecture 70 Unit Mix for the Lyric

Lecture 71 Different kinds of Unit Mix

Lecture 72 Evaluating and Comparing Companies

Lecture 73 Evaluating the Demographics

Lecture 74 Data Explanation through Case Study

Lecture 75 Comparable Transaction Method

Lecture 76 Calculating the Comp Sales

Lecture 77 Senior Debt and Investor Equity

Lecture 78 Determining the Base Rental Income

Lecture 79 Evaluating the Operating Expenses

Lecture 80 Calculating the Interest Expense on Debt

Lecture 81 Adding Interest and Principle Amount

Lecture 82 Cash Flow to Equity Investors

Section 8: Case study OF LRIC REPE

Lecture 83 Multiples and Perpetuity Growth Methods

Lecture 84 Present Value of Terminal Value

Lecture 85 Evaluating the Exit Cap Rate

Lecture 86 Opportunistic Real Estate

Lecture 87 Market Description and Comparable Properties

Section 9: Case study on Real Estate Modelling

Lecture 88 Comparison for same properties

Lecture 89 Utilization of Total Time Period

Lecture 90 Vhouse Investment Analysis Model

Lecture 91 Interest Coverage Ratio

Individuals looking to start a career in real estate investment, development, or management will find this course invaluable for building foundational skills.,Real estate agents, brokers, and property managers seeking to enhance their analytical skills and understanding of real estate modeling techniques will benefit greatly.,Professionals in finance or investment roles who wish to deepen their knowledge of real estate investments and valuation methodologies.,College or university students pursuing degrees in real estate, finance, or business who want to gain practical skills in real estate modeling and analysis.,Individual investors looking to improve their decision-making capabilities in property investments by understanding valuation, risk assessment, and cash flow analysis.,Entrepreneurs planning to develop or invest in real estate projects, seeking a comprehensive understanding of the financial and operational aspects of real estate.