Financial Modeling Certificate(1/2) Questions and Correct Answers
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Course
Financial Modelling
Institution
Financial Modelling
What makes learning to model real estate assets challenging? Industry limitations to "one size fits all" modeling • Different players interact with real estate financial models in different ways
Financial models are key to many real estate functions Such as: Private Equity Brokers Lenders Operat...
Financial Modeling Certificate(1/2)
Questions and Correct Answers
What makes learning to model real estate assets challenging? ✅Industry limitations to
"one size fits all" modeling • Different players interact with real estate financial models in
different ways
Financial models are key to many real estate functions ✅Such as:
Private Equity
Brokers
Lenders
Operators
Asset Managers
Property Management
Formatting and Layout ✅Always assume the model will be used by someone else •
Be predictable •
Create "plug-and-play" models to increase efficiency
Color Coding ✅Hard-coded numbers (inputs) =1234 Blue
Formulas (calculations) =A1*A2 Black
Links to other worksheets =Sheet2!A1 Green
Dates and Timelines ✅-Real estate models are heavily reliant upon dynamic dates and
timelines
-EOMONTH(start_date, months) used for calculations with dates
-Time is often used as an input with custom formatting
-Built on monthly cash flows that are later summarized annually
Rules of Thumb ✅Avoid unnecessarily long formulas
Avoid merging cells, center across selection instead
Avoid naming cells and ranges
Only use decimals for cap rates, yields, IRRs, and multiples
• Use cell comments to cite assumptions
Modeling Best Practices Key Takeaways ✅Formatting is important •
General modeling best practices translate to real estate modeling •
Reliance on dates and timelines make real estate models unique
Three Main Sheets ✅-Inputs & Drivers
-Model
-Transaction Summary
Three Types of Models ✅1. Multifamily
2. Commercial (office, retail, and industrial)
3. Development
Multifamily model ✅Based on Historical financials
Commercial Model ✅Based on Argus outputs
Development model ✅Based on Development budget and Construction timeline
other model formats ✅• Every section of the 'Model' sheet gets its own tab • Additional
summary sheets • Summary and inputs sheets combined • Single sheet model • One
size fits all model
What is Argus? ✅Software program used to project cash flows for commercial property
types •
Can be used for complete underwriting but is almost never done •
◽Each commercial tenant has different lease terms, many of which required different
methods of calculation ◽Lease expirations introduce probabilities into cash flow
calculations, which is possible to model in Excel, but very cumbersome
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