Real estate private equity modelling tests - HELP PLEASE!
Hi guys,
I seriously need your help. So I’ve done a few modelling tests within real estate PE, they’re mainly cash flow models at asset level.
I ALWAYS FAIL THESE AND ITS SO FRUSTRATING!!! All the models I did was slightly different and it really throws me off.
I know the general layout of these models. They start at revenue down to operated expenditure to NOI to debt services blah blah.
I’ve noticed the troubled area I have is around the debt. Some on the modelling tests have no amortisation on debt and others do… with a amortisation schedule you can use PPMT for principal payment on loan and IPMT function for the interest portion only. But what do I do if there is no Amortisation?
I looked at courses such as uDemy, a course by Justin Kivel but it was only a little useful.
please guys if there’s any resources that offer a step by step guide that I can use to learn this for my next modelling test that would be great. Im tired of this and can’t be failing these tests again and again!!
thanks.
Interest only period should be a hard coded function. If the loan is 1,000,000 at 5% then it should be =1,000,000*.05%/12 through the interest only period. Maybe you should watch more udemy and immerse yourself in modeling and you would perform better on these tests
When there is no amortisation period for the debt how do I tackle that?
guys if anyone reading this could offer some support it would be greatly appreciated!! Thanks
Following
Check ACRE
Hey could you expand on that a little? ACRE? Just googled and couldn’t find.
Adventures in commercial real estate (modeling course)
When there is no amort you should thank your lucky stars bc it should save you time. At a big institutional investor and we use 5-10 year interest only debt for everything. Calculate the interest and keep it flat and the debt level the same at payoff, and keep a line for principle/amort at 0 the whole time just to show it as a necessary line item. 10mm loan at 5% is 500k in interest per year or ~41.6k a month and you just roll that on through nice and easy. No special functions needed. Not sure if I’m missing the bigger question here… a lot of loan assumption deals we see have a specific io period which rolls off during the hold and you just do a normal amort schedule and start that on maturity of the io period. Penciling io debt is the best tbh bc it takes two seconds.
*assuming it’s fixed which for us is 100% of the time on deals we see.
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