Universal business model for evaluating the profitability of real estate investments
Originally published: 01/09/2020 12:12
Publication number: ELQ-48355-1
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Universal business model for evaluating the profitability of real estate investments

Investing personal and borrowed funds in real estate: evaluating options

This model can serve as part of a business plan as part of the financial justification of the project, which must be provided to the bank in order to obtain credit funds.

This business model helps to evaluate different options for financing the purchase of real estate, as well as financial results when using personal and borrowed funds in different proportions.

For an accurate and concise assessment, the data are divided into periods: the results can be obtained both by year and by a specific month of a single year.

Key indicators for decision making: Leveraged Total IRR, Unleveraged Total IRR, Construction Project IRR - Leveraged, Construction Project IRR - Unleveraged, Cap Rate, DCF Discount Rate, DCF Leveraged TOTAL, DCF Unleveraged TOTAL.
The document is equipped with a macro for assessing loan amortization.

In the tab Construction Schedule Calc there is also a macro for forming a construction schedule, based on the timing of the project, as well as the choice of parameters and works to be performed during the project.

The data is displayed in the form of a cost report.
As a result of filling in all the input data, you received calculated formulas that will reflect the real picture of the investments you made.

The proposed business model is suitable for both residential and commercial real estate due to its versatility, flexibility and versatility.

This Best Practice includes
1 Excel document

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