Build-to-Rent (BTR) Development Model in Excel - Video Walkthrough
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- čas přidán 3. 07. 2024
- Allow me to introduce our new Build-to-Rent Development Model in Excel. This model is built on the foundation of our Apartment Development Model, employing many of the same methodologies and modules used in that model. It allows you to model merchant-build and build-to-core BTR development scenarios. To learn more and to download the model: www.adventuresincre.com/build...
00:00 - Introduction to our BTR Development Model
00:44 - Getting Started with the Model
02:08 - Underwriting - Sources and Uses
12:00 - Underwriting - Permanent Debt Takeout
12:44 - Underwriting - Operating Cash Flow
19:45 - Underwriting - Stabilized Value
22:52 - Underwriting - Project-Level Returns
23:30 - Underwriting - Partnership-Level Cash Flows (Waterfall)
26:21 - Summary Report
28:28 - Annual Cash Flow Report
28:46 - Data tab
30:08 - Detailed Expense Module
32:58 - Conclusion
The creation of this model was inspired by a query during one of our live A.CRE AMA sessions. Join us for an upcoming AMA and connect directly with industry leaders: adventuresincre.com/events/am...
Explore our extensive Library of Real Estate Excel models: www.adventuresincre.com/libra...
Elevate your real estate modeling skills with the A.CRE Accelerator: www.adventuresincre.com/accel...
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Residual land value automation is beautiful.
As usual, awesome and legendary.
Where do you find LPs and GP investors? Do you just call funds and present your deals? What's the best practice here?
Every Sponsor handles capital raising differently, with a variety of paths to raising capital for CRE investments.
Generally, GP capital is contributed directly by the Sponsor, although some firms raise GP capital separately.
LP capital generally comes from external partners, either from institutional entities or high net worth investors. For instance, Spencer - the author of this model - is President of a REPE firm (Stablewood) that raises institutional LP capital (i.e. pension fund, life insurance company, endowments, etc) for its investments. Other sponsors syndicate LP capital (and in some cases GP capital) from a group of high-net-worth investors. And in other cases, sponsors raise LP capital from a family office.
Hope that helps!
Brother please teach me how to make this
His files are magically self explanatory.
And with cashflow, do you guys account for inflation and discounting for DCF?
You can apply growth factors to income (D96 of the Underwriting tab), operating expenses (D130:D139), and capital expenditures (D145:D146).
The model calculates IRR on an unlevered and levered basis at the property level, and IRR at the partnership level. IRR is a DCF return metric and equates to the discount rate at which net present value is equal to zero.
Thank you for the video. I'm a younger real estate analyst currently working in land acquisition for a build to sale development company. I do not have a formal college degree. I use your videos to build project specific modules, however I find it difficult to plug and play with a model that I did not build as there are always different assumptions or specific outputs I am solving for. Would it be expected for someone working in acquisitions to be able to build a model that is as dynamic as this one from scratch? Just trying to get a better understanding of where my skills compare to peers in a global sense.
Spencer here - thanks for the comment! Great to hear you're making good use of A.CRE models! In my opinion, as someone that hires investment professionals regularly, every CRE investment professional should be able to build models from scratch.
Now, I don't necessarily expect them to have built highly complex models - that comes with practice - but I at least expect them to understand how real estate cash flow works such that they could, with enough time and some guidance, build any model from scratch.
With all that said, there's a gap between that expectation (an expectation I'd bet most senior people in the industry share), and what most CRE investment professionals can actually do. Most rely on template models (or Argus) that they don't really understand how they're built. This creates a hole in organizations where the organization lacks the technical capability to model bespoke situations - and an opportunity for those with the proper training to fill that hole.
At risk of sounding like I'm giving a shameless plug, that's why we created our A.CRE Accelerator program - to equip people with the skills to build their own models from scratch, not just rely on template models built by others. Hope that was helpful input!
I cant figure out how to make it so that my loan is paid off in payments rather than lump sum on the sale
Sure. It sounds like you're looking to use the 'Permanent Debt' module. Or in other words, rather than paying off the Construction Debt with a sale, you're planning to hold long-term. Holding long-term thus requires using permanent debt to pay off the construction loan.
The first step to use Permanent Debt is to active the module by clicking the 'Perm. Debt' button in cell I85. Clicking that will open the 'Perm. Debt' assumptions section. Therein, you will update blue font cells with the relevant Permanent Debt terms. If you expect the loan to amortize (i.e. debt service payments include both interest AND principal), set the 'Interest-Only' dropdown to 'No'.
Hope that helps!
@@adventuresincre So it's already in this model? or do have to get another model just to do perm loans?
@@christianstill.6654 Correct. A Permanent Debt module is included in this model. Go to cell I85 of the Underwriting tab in this model and click 'Perm. Debt' to activate the Permanent Debt module.
Residual land value automation is beautiful.