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MS Excel Alternative to ARGUS DCF

It is little secret among our readers that I view ARGUS DCF as a necessary evil. On the one hand, it is the industry standard for underwriting real estate. Virtually every broker package for institutional quality deals comes with an ARGUS run, and most real estate shops use the software in their analysis. On the other hand, it’s a black box, where assumptions go in one end and cash flows spit out the other and relative to Excel, it’s cumbersome to learn and use. As a result, most CRE professionals I know model to NOI in ARGUS – more out of necessity than anything – and then export the data to their proprietary Excel models for the remainder of analysis.CRE DCF

Update February 19, 2017: Check out the model I built and track my progress on this project: the All-in-One Underwriting Model for Real Estate Development and Acquisition

Can it not be done in Excel?

So why not model the entire deal in Excel? I’ve asked this question many times, and the answer seems to always be: it’s too difficult to model all of the complexities (reimbursements, rent increases, concessions, percentage rent, etc) of office, retail, and industrial leases in Excel. I’ve heard stories of real estate professionals building Excel alternatives, but I’ve never actually seen one nor do I know of one used in practice.

And so to the point of this post. I’m interested in taking a crack at this challenge. In my spare time in the coming months, I’m going to begin work on a fully functional, real estate discounted cash flow model that can do most everything ARGUS DCF can do. I’d appreciate your thoughts, feedback, and support along the way. If you have an Excel model you’d like to share that might help with this endeavor, I’d love to take a look at it. And from time to time, I’ll update you on my progress.

As always, you can reach out to me by visiting my contact page at: www.spencerburton.org.

UPDATE 9/19/2015: It was recently announced that ARGUS will stop selling ARGUS DCF at the end of this year and stop supporting the software all together in 2017. It seems the company is pushing for their customers to transition to their more comprehensive real estate toolkit known as Enterprise (AE). This is another reason to look for an Excel alternative to ARGUS DCF – at least for the smaller real estate shops who don’t have the financial wherewithal to purchase Enterprise.