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Calculate Residual Land Value in Excel

Here's the scenario. You're a real estate developer. You spot a prime parcel of land that would be perfect for your real estate project. So you approach the owner of the land about selling and she says, "Okay, bring me an offer." How much do…
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The Limitations of IRR When Evaluating Real Estate Investments

The internal rate of return is one of the most commonly used metrics to value real estate investment opportunities. Simply put, the IRR is the target percent an investor is expected to earn over the life of the investment if the investment performs…
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30/360, Actual/365, and Actual/360 - How Lenders Calculate Interest on CRE Loans – Some Important Insights

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…
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After Tax Analysis in Real Estate (Now Included in Ai1)

When modeling real estate investments, industry practice is generally to stop at before tax cash flow. And this makes sense in most instances. No two owners of real estate have the exact same tax situation and no two properties necessarily…
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Understanding Acquisitions: The Letter of Intent (LOI)

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.…
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Could You Be Exiting Too Early? Don’t Forget to Analyze Your Reinvestment Rate

When attempting to maximize the value of your money invested in real estate, the timing of your exit is key to maximize your return. As an example, let’s take a look at the base case from my Multifamily Model posted earlier for 123 Fake…