For several years now, our library of real estate models has been lacking a robust ground-up apartment development model. Sure, our All-in-One (Ai1) model has the capability to model multifamily development deals, but it’s more a generalist tool than a specialized one. As a result, I’ve found it wanting when used to model developments.
So a few months back, I decided to build the ideal (in my eyes) apartment development model. I laid out some basic criteria for what I viewed as the optimal real estate development model, and then set out to build it for multifamily investments. It’s been a really fun project and I’m excited to share the results with the A.CRE audience. Below you’ll find an overview of the model, a video guide to getting started, and a link to download the model.
I’ll follow up this post with additional tutorials and support, similar to the type of resources I’ve created for the Ai1. I hope you enjoy this model as much as I do!
Basic Objectives – A.CRE Apartment Development Model
As I planned out my ideal apartment development model, there were a few criteria that guided the model’s creation. First, I wanted the model to be robust – meaning the model had to be able to do everything an institutional-quality multifamily development model can do. I’ve seen hundreds of institutional (and non-institutional) real estate models in my career, and I can honestly say this model holds its own in terms of features and functionality.
Second, I wanted it to be simple and intuitive. It seems conventional modeling wisdom is, the more comprehensive a model, the more tabs it must have. And I’m as guilty of this as the next guy – my Ai1 model has 30+ tabs! However, I wanted this project to be different. I set out to build the apartment development model with just one assumptions tab, and one report tab. And while I’ve since added two optional tabs that also have inputs (Detailed OpEx and Retail Income tabs), all assumptions necessary to run a full analysis are housed on one simple to use and navigate tab.
Finally, I wanted the model to be visually appealing. I paid special attention to heading, subheading, input, output, and other formatting elements. I built attractive toggle and recalculate buttons, and separated the various sections using attractive formatting styles. The printer-friendly Summary tab, which displays the high-level outcomes of the analysis, uses custom charts and sections to visualize the cash flow, risk, and return results. While I admit what is visually appealing is in the eye of the beholder, I’m pleased with the results and hope you will be too.
This model likely still contains errors. If you spot an error, have a feature request, or would like to make a suggestion to improve the model, please let me know.
Overview – A.CRE Apartment Development Model
The A.CRE Apartment Development Model includes one primary inputs tab, one report tab, two optional input tabs, one data tab, and a tab to track version changes to the model.
Version Tab (Visible by default)
The model opens initially to this tab so you can see what changes have been made in the most recent version of the model. On this tab you can also find links to model tutorials, guides, support, and other information.
Underwriting Tab (Visible by default)
The Underwriting tab is where all of your primary inputs are entered. The tab is broken up into six sections, built from top to bottom. The sections can be accessed either by scrolling down to each or using the buttons along the top of the screen. The six sections are ‘Description’, ‘Development’, ‘Operations’, ‘Reversion (Sale)’, ‘Returns’, and ‘Sensitivity’.
Summary Tab (Visible by default)
While the return metrics levered IRR, levered EMx, and Development Spread are shown shown along the top of the Underwriting tab, the bulk of the risk and return metrics are shown/visualized on the Summary tab. The summary tab also includes six charts, a strengths/weaknesses section, a frame to include a picture/map, and a summary of the investment. The Summary tab is meant to be printed, and as such the view mode is set to Print Preview by default.
Retail Income Tab (Hidden by default)
On the Underwriting tab, the user has the option to model retail income. When this mode is toggled on, a ‘Retail Income’ tab becomes available. In this tab, the user enters a retail rent roll, expense recovery assumptions, basis retail operating expense assumptions, and leasing cost assumptions. The outcomes from this tab flow back to the Underwriting tab, where retail line items (e.g. ‘Retail Income’ and Retail Leasing Cost Reserves’) are added to the analysis.
Detail Expenses Tab (Hidden by default)
Similar to modeling retail income, on the Underwriting tab the user has the option to toggle a detailed operating expenses mode. Rather than entering annual values for the ten preset operating expense line items, when the user toggles the ‘Detailed’ operating expense mode on the Underwriting tab, a ‘Detail Expense’ tab becomes available where the user can detail out operating expenses. The detail then flows back to the Underwriting tab.
Data Tab (Hidden by default)
Some basic backend settings are housed in a Data tab. These settings are related to the s-curve development cash flow forecasting module, date and period headers, and may include other settings as the model evolves.
Guide to Getting Started Video Walk-through
To help you get started using the model, I’ve recorded a quick video overview of the model to get you started. I plan to follow up this video with more comprehensive tutorials and a model support forum.
Download the A.CRE Apartment Development Model
To make this model accessible to everyone, it is offered on a “Pay What You’re Able” basis with no minimum (enter $0 if you’d like) or maximum (your support helps keep the content coming – typical real estate development models sell $100 – $300+ per license). Just enter a price together with an email address to send the download link to, and then click ‘Continue’. If you have any questions about our “Pay What You’re Able” program or why we offer our models on this basis, please reach out to either Mike or Spencer.
Note #1 (especially for Gmail users): The model is sent via email and occasionally is blocked by spam filters. If you don’t see the email arrive within five minutes, check your spam folder.
Note #2: This version of the model is only compatible with Excel 2013, Excel 2016, and Excel 365
We regularly update the model (see version notes). Paid contributors to the model receive a new download link via email each time the model is updated.
A.CRE Apartment Development Model
- Simple, intuitive, and robust model for analyzing apartment development opportunities
- One primary input tab, two optional input tabs, and one report tab
- Extensive development module
- Expandable unit mix capability
- Includes retail income module
- Simple or detailed operating expense underwriting
- Sensitivity analysis
- Institutional-quality apartment development model
- *Note: This model is in beta and likely contains errors
This Excel file (the "software") is distributed as is, completely without warranty or service support. www.AdventuresinCRE.com and its authors are not liable for the condition or performance of the software. www.AdventuresinCRE.com owns the copyright and grants users a perpetual, irrevocable, worldwide, non-exclusive, royalty-free license with respect to the software as set forth below.
www.AdventuresinCRE.com and its authors hereby disclaim all implied warranties. www.AdventuresinCRE.com grants the users the right to modify, copy, and redistribute the software and documentation, both within the user's organization and externally, subject to the following restrictions:
1. The users agree not to charge others for use of the software, regardless of whether users have altered and/or improved the software in anyway.
2. In any use of the software, the users agree to acknowledge the www.AdventuresinCRE.com authors that developed the software.
3. The users agree to obey all government restrictions governing redistribution or export of the software.
4. The users agree to reproduce any copyright notice which appears on the software and documentation on any copy or modification of such made available to others.
- Added “Detail” option to development cash flow modeling
- Added Growth Begin assumption for operating income and expenses
- Added Valuation/Unit metric to Summary tab