As I’ve mentioned in other Watch Me Build posts, one way to become a better real estate financial modeling professional, is to watch other professionals model. Thus, the more exposure you can get to other’s methods, the more adept a real estate professional you will become.

This is especially the case with modeling real estate equity waterfalls. While modeling up an apartment deal is generally an intuitive process, modeling partnership cash flows is not. So for this reason, and in response to numerous requests from our readers, I’ve recorded a video of me building an equity waterfall.

Real Estate Equity Waterfall Offerings on A.CRE

If you’ve found this post, you’re likely needing help building your own waterfall model. Most likely, you’re either a student working on a school project, a prospective employee needing to bone up your skills for a real estate technical interview, or a professional with a live deal you need help modeling. In addition to watching this video, and following along with the model (see download link below), you might also check out the other real estate equity waterfall resources we have here on A.CRE.

Setting Up The Video

This video is not meant to teach you everything you need to know about real estate financial modeling and Excel.  But if you’re like me and enjoy learning new methods for tackling a modeling problem, I think you’ll find a few tricks here you’ll be able to use.

I do my best to vocalize what I’m doing and why I’m doing it as a go from one formula to the next. There’s a slight error in the video during the second hurdle, where I accidentally turned off recording for about 30 seconds. You won’t miss much, as those 30 seconds only included me adding a few labels and linking to a couple of assumptions. But if you have questions, please let me know and I can amend this post with further explanation.

Below I’ve posted the completed model for you to download and recreate yourself if you’d like. The download link includes a zip file containing two workbooks. The first workbook is the fully completed model found in the video. The second is a blank workbook, but with formatting included, to use as you follow along with the video. As always, if you have any questions or comments, please don’t hesitate to reach out.

Download The 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 models sell for $100 - $300 each). 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 (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.

Watch Me Model - Real Estate Equity Waterfall Excel Files

  • The file used in my 'Watch Me Model' video where I complete a real estate modeling exercise
  • Includes a zip file, containing two workbooks
    • A blank workbook with formatting to use as you follow along
    • The fully completed model to check your formulas against
  • In this video I model:
    • Set out the basic assumptions needed to calculate partnership cash flows
    • Model three tiers (preferred return + return of capital, tier 2, and tier 3)
    • Complete the model by outputting the sponsor and LP's contributions, distributions, and returns
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About the Author: Born and raised in the Northwest United States, Spencer Burton has over 15 years of real estate investment and development experience. In his current position, Spencer assesses new acquisition, development, and debt opportunities for a $45bn real estate fund. He resides in Dallas, TX.