RE Modeling Exam help

Ah, the classic real estate modeling conundrum! Based on the highest ranked content on WSO, here's a quick outline to help you tackle this real estate modeling test:

1. Set Up Your Assumptions Sheet:

   • List all the given assumptions for income, expenses, debt, and sale.
   • Make sure to format the assumptions so that they can be easily changed (sensitized) for scenario analysis.

2. Create the Proforma:

   • Build a 5-year proforma income statement, including all income and expense items.
   • Apply the rent growth rates, vacancy factor, parking, and miscellaneous income as specified.
   • Calculate the operating expenses and capital expenditures per unit, escalating them annually at the given expense growth rate.

3. Debt Scheduling:

   • On a separate tab, create an amortization table for the debt based on the LTV, interest rate, and amortizing terms provided.
   • Calculate the annual debt service which will be used in the proforma.

4. Calculate Net Operating Income (NOI):

   • Subtract the vacancy and operating expenses from the total income to get your NOI for each year.

5. Solve for Entry Price and Cap Rate:

   • Use the required 15% IRR to back-solve for the purchase price.
   • The entry cap rate is the Year 1 NOI divided by the purchase price.

6. Build Sensitivity Tables:

   • After you have your base model, create sensitivity tables to show how changes in key assumptions like interest rate and entry cap rate affect the IRR.

7. Exit Calculations:

   • Calculate the sales price at the end of Year 5 using the exit cap rate and the final year NOI.
   • Remember to account for transaction costs on sale as specified.

8. Calculate Returns:

   • Determine the levered IRR, equity multiple, and unlevered IRR based on the cash flows from the proforma and the sale proceeds.

9. Formatting:

   • Ensure your model is clean, well-formatted, and user-friendly. This includes clear labels, consistent color coding for inputs/outputs/calculations, and checks for errors.

If you're still feeling like a monkey swinging in the dark, remember that practice makes perfect. You can also reach out to the community on WSO or look for financial modeling templates that WSO offers as a bonus to get a head start. And if you need a more detailed walkthrough or an example, feel free to swing by the forums where many a wise primate have shared their knowledge. Keep at it, and you'll crack this nut in no time! 🐒💼

Sources: Real Estate Modelling Test Practice, Real Estate Modelling Test Practice, Real Estate Modeling Test Examples, Run Me Through This Real Estate Model, Real Estate Financial Modeling for beginners