Trending Content - Real Estate Forum
Career Resources
WSO Free Modeling Series - Now Open Through
August 31, 2026
9 Free Financial Modeling Lessons
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
+Bonus: Get 27 financial modeling templates in swipe file
+Bonus: Get 27 financial modeling templates in swipe file
High Finance Applications
Guaranteed
Get at least one offer GUARANTEED
- 1:1 support
- 92% success rate
- 2,000+ mentor network
- Unlimited Live bootcamps
- AI for resume + LinkedIn
- Networking automation tools
- HireVue simulation tool
- Full course library
- Private Slack community
- 20hrs of mocks
- + much more...
zero
Year zero. 100% correct.
zero
JV modeling question (Originally Posted: 03/03/2015)
The refm jv tutorial teaches JV modeling by taking the distributions and using "Investor Injections, Investor Accruals, Tier 1 Annual Distribution, Tier 2 Annual Distribution" lines. The cf difference between hurdles lie in the "Investor Accruals"
In my experience, there is a way of doing JV modeling using the NPV function and a FV factor. I personally prefer the FV factor method as there are less formulas. Does everyone know what I'm referring to? What method do you prefer and why?
I'd be shocked if you heard anyone from a RE AM/PE background use the phrase "investor accruals." That smacks of accounting to me.
"They are making this much"
Why would you be shocked? Are you not in RE PE, and you're just making an uneducated assumption? Accruals are the most important element of waterfall calculations.
=FV(NOMINAL(RATE,12)/12,MONTH,,NPV(NOMINAL(RATE,12)/12,CF1:CFX)+-EQUITY BASIS)
Agree, do you normally use this formula for waterfalls..trying to get the sense of who uses this compared to the "investor accruals between hurdles" method. Also trying to get sense of sophistication of this method vs. others and which shops uses which.
i only use them for lookback calc on non-condo deals (deals with a residual, where the IRR is made up almost entirely of that last CF). otherwise i use the accrual / equity balance / equity repayment method. but every shop has different jv models. interested to hear other responses as well
We only use the accrual method. The formulas I use / have seen for calculating accruals are the following:
1) Beginning Equity Balance * [ (1+hurdle rate)^(1 / # of Periods) -1 ]
* The nominal rate (stated hurdle rates) are equivalent to that of the effective rate.2) (Beginning Equity Balance * hurdle rate) / # of Periods
* The nominal rate (stated hurdle rates) are less than that of the effective rate.If we were to take a preferred return of 12.0% compounded monthly:
Example #1 returns after:
1 month: accrual return of 0.95% 1 year: accrual return of 12.00%
Example #2 returns after:
1 month: accrual return of 1.00% 1 year: accrual return of 12.68%
Quia enim rerum sit et eos. Dolorum dicta est dolorum consequatur velit. Iusto in doloremque voluptas est reprehenderit.
Aliquam quia qui ut quia consequatur labore praesentium. Et ad occaecati a ab et et. Aut laborum iure nam ad exercitationem. Porro placeat dolorem sit vitae aut molestias. Placeat molestias fugit repellat odio.
Est odio molestiae molestias repellat veniam facere nobis. Et animi debitis voluptas. Ut facere nihil iure eligendi placeat.
Dolorum eius adipisci porro natus. Doloribus error earum ipsum nihil vel libero non.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...