I'm looking for any videos/classes that will give me a good base for modeling a ground up real estate development pro forma. I've been on the development side of things for quite some time. Our company develops single family residential homes and provide our investors a preferred return per project.
In the past, we have developed projects and sold them to HF's. Usually 15-30 homes at a time.
I would love to learn more about the financial side of our business but cannot find any videos or material that specifically cover what we are currently doing.
I've looked at Justin Kivel's material but his models are built around stabilizing projects for x amount of time, not selling once projects are complete.
I would like to build pro formas for our build to sell revenue model to show potential investors.
Any help would be greatly appreciated.
I learned all my financial modeling from BIWS (Breaking Into Wall Street), specifically the real estate course. If your company is developing single family homes and then selling them upon completion, I don't see why this would be different from a condo development sellout with a waterfall returns analysis. Either way, if you truly understand the financial concepts (which aren't very complicated), you can model anything you want. At the end of the day, what it really comes down to is Revenue - Cost = Profit. Financial modeling just aims to add more details into that formula such as hold periods, cost of capital etc...honestly, sometimes I think financial modeling is just a way for GP's to justify squeezing every bp out of LP's.
Adventures in CRE has some pretty great content, and it’s free.
BIWS has a good, very simple model to learn the basic mechanics of a construction loan draw and how to incorporate that into a model for a ground-up development. Once you know the basics, Adventures in CRE has a great, more complex development model template.
Also FYI - typically a build to sell/merchant build development means that the property is built, then the developer leases it up to a stabilized occupancy, then it is sold the month the property stabilizes. This is to give the buyer a turnkey asset so they aren't inheriting a fully vacant building. So that needs to be accounted for in your model.
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