I found this old link on WSO with a sample modeling test:
Build a 5 year prorforma. Assume 1% transaction costs for entrance and exit fee for debt and 1% for sale of property. Solve for entry price and entrance cap as well as all of the other data points below assuming you are required to hit a 15% IRR. Make sure everything is sensitized IE dont hard code any inputs into the model. You want to be able to see how changing growth rate from 4% to 2% changes your outputs. Also build an amortization table on separate tab. If you want to impress, build a couple sensitivity tables at the end IE use interest rate and entry cap as your sensitivities with IRR as your output. sorry my formatting is garbage. Everything is a given assumption until you get to "Solve for the following"
Assumptions Income
Weighted Avg Rent (Per Unit) $3,048.00 Rent Growth (1-2) 4% Rent Growth (3+) 3% Vacancy Factor 5% Parking Income $200,000.00 Other Misc Income $90,000.00 Income Growth Rate 3%
Units 125
Expenses
OpEx (per unit) $790 CaPex Reserve (per Unit) $200 Expense Growth Rates 3%
Debt
LTV 70% Interest Rate (Amortizing) 6%
Sale
Exit Cap Rate 6% No Transaction Costs
Building SF 88,600.00
Solve For the Following:
Solve for entrance price and entry cap rate assuming you require a 15% IRR to do the deal
Entrance Cap Rate Purchase Price Purchase Price PSF Loan Amount Equity Levered IRR Equity Multiple Unlevered IRR Sales Price PSF
https://www.wallstreetoasis.com/forum/real-estate…
I was quickly trying to go through it but could not get close to the answers discussed in the thread. If anyone could provide a quick outline or spreadsheet to help it would be appreciated.
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:
Set Up Your Assumptions Sheet:
Create the Proforma:
Debt Scheduling:
Calculate Net Operating Income (NOI):
Solve for Entry Price and Cap Rate:
Build Sensitivity Tables:
Exit Calculations:
Calculate Returns:
Formatting:
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
I’m not gonna walk through building a model step by step in a comment but if you want to pm me your model i’d be happy to try point out any mistakes going on. Or also to answer any specific questions you might have
Thanks! I PMd you
same as above, PM me model and I’ll send it back with comments
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