This is the 12th course in the 16-course Accelerator. In this case-based course, you will learn to model debt from the perspective of both the borrower and the lender.
In this course you will:
- Learn about the real estate capital stack, and how debt is an important piece of any capital strategy
- Build a mortgage amortization table from scratch
- Review various Excel strategies for modeling debt service and loan payoff
- Take a look at the most common debt metrics and how to calculate each
- Learn to size a real estate loan based on DSCR, Debt Yield, and LTV
- Layer debt into development cash flows
- Learn techniques for calculating construction interest reserve
- Model the levered returns of a real estate investment
CASE DESCRIPTION – FINANCING THE FOLES
You are a member of A.CRE Advisors multifamily underwriting team. You and your team recently signed a letter of intent to purchase Foles Tower – a 300 unit, Class A, multifamily high rise in Center City, Anytown.
Thus far, you’ve put together some basic back-of-the-envelope analysis and run a 10-year discounted cash flow on an unlevered (before debt) basis. Your boss has now asked you to layer in debt to understand the risk and returns of the investment on a levered basis.
You have an investment committee meeting scheduled for the end of the week to seek approval to purchase Foles Tower and you’ll need this analysis completed before then. So you sit down with your boss to discuss how best to model the debt.
- Multifamily; concepts apply to all property types
- While we recommend using Microsoft Excel, as that is the industry standard, this course will work with most other spreadsheet software such as Google Sheets and OpenOffice Calc
- This course was built using the Google Chrome browser, thus we recommend you use Google Chrome for optimal view experience
- This course is best taken on a desktop computer, although the platform is compatible with tablet and mobile devices
EXCEL PROFICIENCY REQUIREMENT
- The course assumes you have at least a basic proficiency working with Microsoft Excel
Modeling Permanent Debt
Modeling Development Debt
- Financial Modeling For Development – Draw Schedule Basics
- Understanding The Interest Reserve Calculation and Circular References
- Projecting Equity Over the Development Period
- Projecting Debt And The Interest Reserve Over the Development Period – With Circular References
- Projecting Debt And The Interest Reserve Over the Development Period – Without Circular References
- Finishing The Development Model – Budget, Levered Cash Flow and Return Metrics
Putting It All Together - Financing the Foles