Knowledge Base: Real Estate Modeling Tutorials

Real estate modeling refers to financial modeling for properties, such as apartment buildings, office/retail buildings, and industrial assets such as warehouses and data centers.

The usual goal is to forecast the property’s revenue and expenses over a holding period, assume a purchase in the beginning and a sale at the end, and calculate the returns to the equity investors (the owners) and the debt investors (the lenders that provide the financing).

The main categories of real estate financial models include acquisitions, developments, and renovations, with sub-categories for variations such as pre-sold condo developments in the residential sector.

If you want to build financial models for properties, you must understand the property pro-forma, including how to move from Revenue down to Net Operating Income (NOI) and Cash Flow to Equity.

In more advanced models, it’s also critical to understand lease modeling and how to factor in points like free months of rent, turnover vacancy, tenant improvements, and leasing commissions on a granular basis.

We have a full guide to Real Estate Modeling with several Excel examples on Mergers & Inquisitions, but you can access excerpts from our Real Estate Modeling course and additional samples and tutorials below: