What is Financial Modeling in Real Estate?
Financial modelingWhat is Financial ModelingFinancial modeling is performed in Excel to forecast a company's financial performance. Overview of what is financial modeling, how & why to build a model. in real estate is used to forecast the future cash flows of a property and determine its value. For example, a development project for an apartment building would require a model that shows the project’s capital costsCapital ExpendituresCapital expenditures refer to funds that are used by a company for the purchase, improvement, or maintenance of long-term assets to improve, condo sales (absorption rate), and resulting cash flow and profit to the developer. Important metrics in real estate modeling include net operating income (NOI), Cap Rate, and internal rate of return (IRR)Internal Rate of Return (IRR)The Internal Rate of Return (IRR) is the discount rate that makes the NPV of a project zero. Learn how to use the IRR formula..
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