This is a 3-tiered debt module that will allow the user to add one to three tiers of debt to his or her real estate DCF model. Includes the option to layer in senior debt, secondary debt, and mezzanine debt; calculate interest on either a 30/360, actual/360, or actual/365 basis; and model additional proceeds (i.e. […]
The Letter of Intent – Legal Issues The letter of intent is a critical document that is written up at the beginning of a potential real estate transaction between either a prospective buyer and seller or a prospective tenant and landlord. The LOI contains preliminary understandings between both parties about major points of interest and concerns […]
I am excited to introduce our new Hotel Valuation (Acquisition) Model to underwrite both stabilized and value-add hotel opportunities. This hotel pro forma is designed to allow users to do everything from a quick back of the envelope exercise to a fulsome and detailed underwriting exercise in which the user can get into the weeds […]
Welcome to the A.CRE Hotel Valuation Model‘s Tutorial Page. On this page you will find all the tutorials for the A.CRE Hotel Valuation model in Excel. There is a lot to learn within this model and over time, I’d like to show you both how to use it as well as how I built it. […]
Hotels are a unique asset in the commercial real estate world and are underwritten differently as a result. Probably the most obvious difference is the duration of the ‘lease term’ of the tenant, which is usually daily to weekly. Another major difference is that hotels are more operating intensive and typically contain other complimentary services […]
I’ve built a new acquisition model that I am excited to share with our readers. This is a back-of-the-envelope (BOE) valuation model that can be used for retail, office, and industrial properties. The goal was to create a sleek and clean look to the model that would enable a third party to easily understand what […]
Ever since Spencer wrote his post about why he chose to do an MRE as opposed to an MBA or a dual Master’s degree, I have been asked a lot by our readers about why I chose to go for both an MBA and MRE. Below I will discuss my rationale and thoughts and provide […]
In this post, we are going to take a deeper look into capital expenditures. What it is and how we account for it in cre underwriting. Capital expenditures, commonly referred to as Cap Ex, are expenses that occur outside of normal operating expenses. They are items that ownership either needs to or decides to pay […]
In this post we will go into detail about the four CRE risk profiles commonly ascribed to commercial real estate opportunities. In order of least risky to most risky, they are as follows: Core Core Plus Value Add Opportunistic This broad categorization helps commercial real estate professionals to quickly describe the type of risk/reward profile […]
Commercial real estate lenders commonly calculate loans in three ways: 30/360, Actual/365 (aka 365/365), and Actual/360 (aka 365/360). Real estate professionals should be aware of these methods if they want to understand the real interest rate as well as the total amount of interest being paid over the term of a loan. This post will go over how these calculations […]
The video below and corresponding downloadable templates will walk you through how to build a basic construction draw schedule. Basic Construction Financing & Draw schedules: A Conceptual Overview A standard draw schedule with a basic capital stack of debt and equity works as follows: The development budget is created and projected out over the anticipated […]
Working a lot with development draw schedules, I have always been looking for a catch all solution as to how one could easily model all the unique ways cash actually flows over time during the process. The norm for many is to model cash flows using a straight line method with even payments over time, […]
Here is a simple, yet very powerful, 4-tier equity multiple waterfall module. This post contains both a completed version of the module ready to plug into a real estate financial model as well as a ‘Watch Me Build’ template and companion video where I walk the user step by step through building it out. EM […]
A 1031 Exchange, or Like-kind Exchange, is a strategy in which a real estate investor can defer both capital gains tax and depreciation recapture tax upon the sale of a property and use that money, which has not been taxed, to purchase a like-kind property. THE ADVANTAGES OF THE 1031 EXCHANGE Using a 1031 Exchange […]