Free Beginner Real Estate Financial Model
This free real estate financial modelling course for beginners teaches students how to build a simple LBO cash-flow model via a live case study. It is ideal for learners with limited Excel or financial modelling training but who want to quickly progress their financial modelling skills and are preparing for financial modelling tests or assessment centers at a real estate private equity firm.
Beginner Real Estate Financial Modelling Case Study
Course Overview (Beginner Real Estate Financial Model )
Lesson 1 - Assumptions for Real Estate Financial Modelling Case Study
Lesson 2: Asset Cash-Flows of a Real Estate Investment
Lesson 3: Unlevered Cash-Flows of Real Estate Investments
Lesson 4: Unlevered Returns (Including Unlevered IRR) of Real Estate Investments
Lesson 5: Levered Cash-Flows & Levered Returns
This free real estate financial modelling course teaches participants how to build a robust beginner financial model. It lays the foundations for the free advanced real estate financial modelling course and is ideal for students with a basic understanding of Excel but with limited knowledge of financial modelling but who want to learn quickly how to build best-in-class real estate financial models. The course is particularly helpful for candidates that are preparing for financial modelling tests and assessment centres at real estate private equity or real estate investment firms.
The course is taught via seven easy-to-follow video lessons in which participants will learn how to build a real estate LBO financial model in Excel of a commercial real estate investment opportunity via a live case study. The course is taught by Steffen Kluners, who learnt how to build real estate cash-flow models at Blackstone. Consequently, participants will learn how the best real estate investment firms build financial models and analyse real estate transactions. Students will gain access to the Excel based financial models and course materials upon providing the e-mail address after clicking the button above.
Lesson 2: Asset Cash-Flows
In this lesson we are inserting a new tab in the Excel sheet and are including all the assumptions for this financial model on this tab. We will then use these assumptions in the subsequent lessons as drivers for the cash-flows. Since this is a beginner financial model, we will only use one tab on which we include all the calculations, assumptions and cash-flows. This will be different for more complex financial models with multiple leases because in more advanced models we will separate the assumptions from the cash-flow sheet and the calcs but this is not necessary here.
In this lesson, we will start projecting the cash-flow profile of this real estate investment opportunity by using an annual cash-flow model. The asset cash-flows that are modelled in this lesson project the rental income of a long lease let to a single tenant. The cash-flows also include certain operational costs and the Net Operating Income (NOI) as well as some fees. However, the cash-flows do not yet include sales proceeds, acquisition costs or the impact of debt financing and taxes. These will be covered in the next section.
Lesson 1:
Modelling Assumptions
Lesson 3:
Unlevered Cash-Flows &
Exit Valuation
Lesson 4: Unlevered Returns including Unlevered IRR
In this lesson, we project the unlevered cash-flows which include the impact of all acquisition costs including the purchase price as well as the impact of the sales proceeds of the asset at exit. In order to calculate the sales proceeds at exit, we will value the asset at the time of the sale by capitalizing the NOI via the appropriate cap rate.
In this lesson we calculate the most important return metrics of this real estate investment opportunity on an unlevered basis. This means we compute the returns before taking into account the impact of external debt financing. The three important return metrics that are calculated in this lesson are the unlevered IRR, the unlevered MOIC (multiple of invested capital) and the unlevered profit.
Lesson 5: Levered Cash-Flows & Levered Returns
(including Levered IRR)
Lesson 6: Formatting
Lesson 7: Final Purchase Price
In this lesson we are forecasting the levered cash-flows which include the impact of external debt financing. In order to project the levered cash-flows, we first build a debt repayment schedule and then link up the debt repayment schedule with the unlevered cash-flows to calculate the levered cash-flows. We then calculate the levered returns including the levered IRR which is net of the impact of external debt financing.
In this final lesson, we determine the maximum purchase price that Thanos can afford to pay to achieve its target returns. We do this by performing a goalseek analysis to back out the purchase price so that Thanos delivers at least a 20% IRR and a 2.0x equity multiple.
In this lesson we improve the 'look and feel' of this financial model so that it is professionally formatted and looks like the financial model of an institutional real estate investment firm. Some of the things we do in this lesson includes setting the pint area, setting the right margins and including page footers.
The REIA Courses
Are you ready to take your financial modelling and real estate investing skills to the next level?
This beginner real estate financial model lays the foundations to progress to the more complex financial modelling courses offered by the Real Estate Investment Academy (REIA). Additional courses that are currently offered by REIA include a free Excel financial modelling course (Applied Financial Modelling), a free Advanced Real Estate Financial Modelling case study
and four additional paid courses that are structured as a holistic and complete package that covers all topics of real estate investment analysis and financial modelling including the most important theories and concept and advanced real estate financial models. These courses are structured to provide participants with a competitive edge to turbocharge their careers in commercial real estate investing.