WSO Community -
I’m working on a value add model trying to get my modeling down Pat for interview tests and currently practicing on a MF Value Add model. I have the cash on cash formula running through and in the sale year, the cash on cash is coming out to 200%+. Tbis feels wildly incorrect, can anyone lead me to what may be the problem? Happy to provide a screenshot of the formulas I’m working with for my COC line item
| +32 | Are Co-GP development structures successful? | 12 | 12h |
| +19 | How to move from Real Estate to Infrastructure? | 14 | 1d |
| +18 | Capital Formation/Capital Raising Roles Q | 2 | 1d |
| +13 | Multifamily Job Search Advice | 3 | 2d |
| +9 | Insurance company RE investments internship, how is it viewed? | 3 | 9h |
| +5 | TA Realty | 2 | 2d |
| +3 | What Are the Biggest Financial Challenges in Custom Home Construction? | 1 | 5d |
| +3 | UK Capital Raising Environment | 1 | 3d |
| +3 | Wells Fargo RESF | 0 | 6h |
Career Resources
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.
Follow your formula through and it should be clear. Alt + m + v. You'll start pissing people off real quick if you don't figure out/investigate your problems first before asking for help.
Chances are you are including the sale price in your formula. Check that. Just back the sale price out. Alternatively, do the following:
cash on cash = (NOI less capex less debt service + debt or equity future funding) / equity
Yep - for sure the sale price included.
Question re COC to all of you: when you calculate COC for a say 5 year period do you
Cheers
This was the problem, thank you. Why wouldn’t you include the sale proceeds in cash on cash though if it is altering the cash you get in that year? (Might be a silly question)
Ad vel ipsa esse aut placeat consequatur. Perferendis aut perspiciatis blanditiis sequi minima. Natus mollitia sunt debitis nobis. Qui reprehenderit nobis laborum voluptas eveniet consequatur eos.
Ullam dolor in qui consequuntur id facere. Nemo vitae dolores voluptatem ut beatae enim. Nihil nobis quo ab corrupti numquam illum id.
Corporis pariatur consequatur et qui. Eum corrupti at recusandae quia.
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...