What is a Real Estate Development Model? A real estate development model usually consists of two sections: the Deal Summary and the Cash Flow Model. Within the Deal Summary, all important assumptions – including the schedule (which lays out the timeline), property stats, development costs, financing assumptions, and sales assumptions – are listed and used…
Top Forecasting Methods There are four main types of forecasting methods that financial analysts use to predict future revenues, expenses, and capital costs for a business. While there is a wide range of frequently used quantitative budget forecasting tools, in this article, we focus on four main methods: (1) straight-line, (2) moving average, (3) simple…
What is an NOL/Tax Loss Carryforward? A net operating loss (NOL) or tax loss carryforward is a tax provision that allows firms to carry forward losses from prior years to offset future profits, and, therefore, lower future income taxes. The way a tax loss carryforward works is that a schedule is generated to track all…
What is a Depreciation Schedule? A depreciation schedule is required in financial modeling to forecast the value of a company’s fixed assets (balance sheet), depreciation expense (income statement), and capital expenditures (cash flow statement). Depreciation occurs as an economic asset is used up. Economic assets are different types of property, plant, and equipment (PP&E). As…
What is an LBO Model? An LBO model is a financial tool typically built in Excel to evaluate a leveraged buyout (LBO) transaction, which is the acquisition of a company that is funded using a significant amount of debt. Both the assets of a company being acquired and those of the acquiring company are used…
The Foundations of Real Estate Financial Modeling This guide will outline the foundations of real estate financial modeling and the key concepts you need to get started building your own models for development projects. In order to get started, we will begin by defining some of the key terms you’ll need to know before building…
What is a Debt Schedule? A debt schedule lays out all of the debt a business has in a schedule based on its maturity. It is typically used by businesses to construct a cash flow analysis. As shown in the graphic below, interest expense in the debt schedule flows into the income statement, the closing…
What is Real Estate Financial Analysis? This is an excerpt from CFI’s Real Estate Financial Modeling Course. We will begin our real estate financial analysis by calculating the net operating income (NOI). Below are some assumptions for the real estate model: 1. First, we will calculate the gross revenue. Gross Revenue = Average Unit Size…
What is Net Domestic Product (NDP)? Net domestic product (NDP) measures the economic output of a country. It represents the net book value of all finished goods and services produced inside a country geographically during a given period. NDP is a key indicator of a country’s economic growth, which is released by the Bureau of…
What is Financial Compliance? Financial compliance is the regulation and enforcement of the laws and rules in finance and the capital markets. It ranges through the entire financial spectrum, from investment banking practices to retail banking practices. ` Why is Financial Compliance Important? In the aftermath of the 2008 Global Financial Crisis, financial compliance became…
