Model Debt Draws / Requirements + Waterfall

MCROWN's picture
Rank: Chimp | banana points 5

Does anybody have a model for a real estate financing deal, where you can actually book inflows - sales while you are constructing?

the unlevered cashflows stack up, but I can't get the draws right, given that in some months the inflow from sales is higher than the outflow from building, which seems to mess up my formulas.

There are 2 sources of funding: max equity draw, then max debt, any excess cash should be used to pay pack the debt first, then the equity.

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Comments (4)

Jan 10, 2019

How are you booking the sales, to immediately pay off the loan. If you are so early in the process you may not have hit your financing term so you won't be able to repay before month 18 for example.
You can make a culmulative line item and then have the draw repayment below reference sum+ if end of term date/period

Jan 15, 2019

Are you talking about income during an I/O construction reserve period? If so, I've previously created a 'reserve' account that would capture all projected income above the cost line and draw it down as necessary prior to it hitting the actual cost line; then add in a negative balance in your cap table to adjust for it.

It's pretty simple to do, just create a 'Beginning Balance', 'Funded' and 'Ending Balance' to capture the income/sale coming in. Then you create another three rows below to draw from and just subtract the costs from the captured balance. If you exceed this amount, it flows down to a cash inflow and assume payout to equity.

Not sure if that's the best way to do things, but it's one way I've seen it done.

    • 1
Jan 15, 2019

if that's his point, I agree with you.

Jan 17, 2019