It's just awesome sir Joshua. Thank you very much! This is exactly what I'm looking for. Just like your former students, I'm an associate starting his career in Project Dev. :D
I'm already a team lead in our company, time flies, I went back to this video when I was first learning financial modeling hehe haysttt this little life :)
I have a Ph.D. in synthetic chemistry and feel I know a bit about Excel but I was happy to learn how to do the Absolute Reference (the "$" sign before the row and before the cell). Great Info!
Great video, Joshua! Currently working out a case study, and this is proving to be really useful. One question, I was given market lease assumptions and rent roll info, which both contain monthly returns and lease terms. I have to value the property (find purchase price) and determine the cash flows starting January 1st, 2024. What would be the best way to tackle this? Would I use the MLA values, or rent roll? How do parking spots play into the overall calculation?
I am working on a real company where I took past 3 years of data but there is about 70% change in revenue between yr 2 and 3 which can be due to some projects or something. How do I counter such issues for revenue forecasting as I do not have access to project specific data which might be the revenue fluctuation factor.
Great video 💪! How would you modify the model if you already own the property (e.g. through inheritance) ? Would the purchase price be simply substituted with the last valuation?
Yes, exactly. Use the price that you could sell it for in an open market arms length transaction (less commissions, cost of sale, etc.). If you want to get fancy with it, you could also look at after tax impacts but that's a much longer conversation.
Thanks for your comment. There's a lot more to come... As for markets, most of my investment work is in northern New Jersey but I've done training and consulting work globally.
Hello Josh, Why was the operating expenses positive and not negative at the beginning. Isn’t it a cash outflow? By the way, thank you for the tutorial.
Hi Joshua, could you share that how to incorporate the date for an acquired property where there is no SF value and how to incorporate rent and expense annual increase
Great video! Would also be helpful if you would cover some quick excel shortcuts as you are going through just for some extra practice. Thanks for the help!
Hi, I have a question over the rent. If you acquire a property with a tenant base and the annual rent roll is available, do you use the annual rent roll over the market rent/sq ft and square foot calculation? Thanks
Two questions in mind: 1. for return analysis, does the sale take place at the end of year 5 (while other cash flows happen at the beginning of the years - if so, would that affect the preciseness of irr)? 2. to come up with the sale price in year 5 using cap rate, is it a norm to use the NOI next year (rather than current year NOI or the forecasted average NOI of the coming years)? Thanks very much.
1. It's assumed that everything happens at end of year. If you want more accuracy, run it on a monthly basis. 2. Yes. Next year is normal, but if the forward 12 months is non-stabilized, you'll need to use a different year (prior year, average of two years, etc.)... it's all about using some future year's NOI that is stabilized and reasonable.
BTW everyone a "$" sign before the row and "$" before the column means "absolute reference" in Excel. This means calculations won't move relative to the cell. The calculations will always be based on the one specific "$" row/column'd cell
Joshua great work on the model really appreciate your effort. A question I would like to raise on general vacancy rate why do we subtract them in the cash flow ? Pardon me little knowledgeable on real estate.
It’s a matter of “stabilizing” the cash flow. All values revert to the mean; if the market vacancy is 5 percent, your asset will, over time, mirror the market. Of course, markets vary. Even in the best of cases, there’s losses due to general vacancy, absorption and turnover, and credit losses.
It's in the future... people tend to care a lot more about what they're going to make than what you made. We buy something today based on what we'll make, and we sell tomorrow based on what the next person will make.
Wow, well explained and articulated! Question: For finding historical financial information of a public company, we have the SEC's database to reliably provide that for us. Is there anything similar for real estate, or do you and your colleagues have to get those records from the various brokerages who have previously held the property? Best.
Yes. Most real estate is privately held; as a result, most data is private. So... it’s back to brokers, appraisers, and owners for the most accurate data. And thanks. Glad you liked the video.
Hi Josh, thanks a ton for these tutorials. I'm going through them again in preparation for a task i'm awaiting as part of an interview for a CRE firm. Just wondering, would it be acceptable to do the cash flow model on a quarterly basis, rather than annually? monthly would be too in depth for the information I will be provided, I feel. Thanks!
It depends on the data they give you. If they give you a monthly interest rate or a tenant that vacates mid year, it’s probably easier to do it monthly. Use the data they give you to determine what your schedule should look like. In general, monthly is for cash flow and quarterly is for joint venture/equity waterfalls.
Great video! Could you make one for beginners that aren't super familiar with real estate. I'm currently a junior majoring in Finance and I'm trying to teach myself modeling but find most videos out there pretty intimidating.
That’ll probably be the next thing I do. I enjoy doing the hard stuff but most people just want the basics. Maybe I’ll start with discounted cash flow and build from there.
I advise you to take Corporate Finance by Columbia University in Edx that's for free. It will give you basics of Discounted Cash flow sir Joshua was talking about.
How can we build a financial modelling for 50 flats residential building of house 900 per sq ft ... Selling 4000. Per sq ft . Capex is 8 crore and opex will be 50 lakhs , pls help
@Zachary Brantley Got it. I haven't touched a Mac in 20+ years... the funny thing is that I used to do tech support for them in college... but that was a while ago. I guess some things just don't change.
Hi Joshua - 2 questions : 1) Does this model assume no mortgage? Let's say I'm a small residential investor with a mortgage on the property. Does the "Cash Flow from Operations" just represent the Rental Income minus Operating Expenses in that case? 2) Can you explain why there is no discounting of future cash flows in the model? Or does the IRR% account for discounting? I want to be sure not to overestimate my return by not accounting for discounting future cash flows. Thanks!
I love this dude! He's irreverent, flippant, yet witty.
Thank you. Much appreciated.
To download the Excel file I used in this video, go to: www.kahrrealestate.com/free-stuff/
Hi, this is what exactly I am looking for. I applied as a Financial Analyst in a firm. Thank you so much! I hope I could pass the exam.
"Macs are for artists and Children" - Joshua Kahr, 2020. Truer words have not been spoken.
I'm glad I found a kindred spirit. Thank you. :)
I love when people who do technical tutorials on UA-cam but still have a personality and sense of humor lol!
Wonderful! Very clear yet in depth Analysis!!
It's just awesome sir Joshua. Thank you very much! This is exactly what I'm looking for. Just like your former students, I'm an associate starting his career in Project Dev. :D
I'm already a team lead in our company, time flies, I went back to this video when I was first learning financial modeling hehe haysttt this little life :)
I love this. A big shout out and thank you Mr. Kahr from Germany!
Danke schön.
Thank you so much for building our basics.
Thank you for the clear and concise explanation! Looking forward to learn from your other videos
Josh, you are a baller. Interning at a note fund right now and this is really going to help with collateral evaluation.
Thank you. I do what I can. :)
I have a Ph.D. in synthetic chemistry and feel I know a bit about Excel but I was happy to learn how to do the Absolute Reference (the "$" sign before the row and before the cell). Great Info!
Hi Josh, just chanced upon your video. Very helpful stuff. Thanks for sharing. Cheers!
This is awesome, please add more.
Exactly wat i was looking for! Thank you for this video👍🏾
Thanks Josh. I have a finance background and am about to interview for an Acquisitions Analyst role. Really helpful information.
Best of luck!
Great video, Joshua! Currently working out a case study, and this is proving to be really useful. One question, I was given market lease assumptions and rent roll info, which both contain monthly returns and lease terms. I have to value the property (find purchase price) and determine the cash flows starting January 1st, 2024. What would be the best way to tackle this? Would I use the MLA values, or rent roll? How do parking spots play into the overall calculation?
"Macs are for artists and children." I fainted 😂😂😂😂😂
This is very useful and easy to follow. Thanks for uploading this!
Glad it was helpful!
Just stumbled on your channel. Great content, this is very helpful, and I am looking forward to watching the next videos!
I am working on a real company where I took past 3 years of data but there is about 70% change in revenue between yr 2 and 3 which can be due to some projects or something. How do I counter such issues for revenue forecasting as I do not have access to project specific data which might be the revenue fluctuation factor.
Nice and useful video. Can’t wait to see more! Thanks Joshua :)
Great video 💪! How would you modify the model if you already own the property (e.g. through inheritance) ? Would the purchase price be simply substituted with the last valuation?
Yes, exactly. Use the price that you could sell it for in an open market arms length transaction (less commissions, cost of sale, etc.). If you want to get fancy with it, you could also look at after tax impacts but that's a much longer conversation.
@@JoshuaKahr Thanks! 👍
Thank you for sharing very useful
Great video, thanks!
Hey Joshua! Liked and Subbed for more of that great real estate content! I love the content quality! Can’t wait to see more! What market are you in?
Thanks for your comment. There's a lot more to come... As for markets, most of my investment work is in northern New Jersey but I've done training and consulting work globally.
Hi there!! Great content. Keep it up please. Thanks.
VERY excited for this series! Thank you for doing this Josh!
Thanks. I'll get another one out this week.
so theres no accounting for taxes capex d/a etc like in corporate finance?
"I don't use Mac because it's for artists and Children" 🤣🤣
I love it - thank you so much!!!!!!
Thanks a lot man! This got me a job!
Glad to hear it
Could you do a video for an easy Land development feasibility analysis for new developers? In our case was to build townhomes.
Hello Josh, Why was the operating expenses positive and not negative at the beginning. Isn’t it a cash outflow?
By the way, thank you for the tutorial.
Thanks, how do we alter the model if it is purchase price we are trying to find? Thanks
Hi, i found this video really interesting
hey i am new to real estate and im struggling how to find growth rate income and expenses formula please help.Thank you for the great video
Hi Joshua, could you share that how to incorporate the date for an acquired property where there is no SF value and how to incorporate rent and expense annual increase
Thank you!
Hi, loved the video. I just had 1 question, what is the purchase price based on?
Great video! Would also be helpful if you would cover some quick excel shortcuts as you are going through just for some extra practice. Thanks for the help!
Josh, I'm assuming the "rent" and "op exp" are for the whole year. So $20/sq ft is actually (20/12 = $1.66 sq/ft) for each month. Is that correct?
Hi, I have a question over the rent.
If you acquire a property with a tenant base and the annual rent roll is available, do you use the annual rent roll over the market rent/sq ft and square foot calculation?
Thanks
Both. Show what the property currently cashflows as well as what it would be cash flowing based on the market
Cap rate same as WACC discount rate?
Wonderful
how do i build a model to determine the purchase price?
Two questions in mind: 1. for return analysis, does the sale take place at the end of year 5 (while other cash flows happen at the beginning of the years - if so, would that affect the preciseness of irr)? 2. to come up with the sale price in year 5 using cap rate, is it a norm to use the NOI next year (rather than current year NOI or the forecasted average NOI of the coming years)? Thanks very much.
1. It's assumed that everything happens at end of year. If you want more accuracy, run it on a monthly basis. 2. Yes. Next year is normal, but if the forward 12 months is non-stabilized, you'll need to use a different year (prior year, average of two years, etc.)... it's all about using some future year's NOI that is stabilized and reasonable.
@@JoshuaKahr Thanks so much! Look forward to learning even more from the next parts.
BTW everyone a "$" sign before the row and "$" before the column means "absolute reference" in Excel. This means calculations won't move relative to the cell. The calculations will always be based on the one specific "$" row/column'd cell
Joshua great work on the model really appreciate your effort.
A question I would like to raise on general vacancy rate why do we subtract them in the cash flow ? Pardon me little knowledgeable on real estate.
It’s a matter of “stabilizing” the cash flow. All values revert to the mean; if the market vacancy is 5 percent, your asset will, over time, mirror the market. Of course, markets vary. Even in the best of cases, there’s losses due to general vacancy, absorption and turnover, and credit losses.
May I know why the following year NOI should be used instead of the current year NOI to calculate the current year sale price
It's in the future... people tend to care a lot more about what they're going to make than what you made. We buy something today based on what we'll make, and we sell tomorrow based on what the next person will make.
Wow, well explained and articulated!
Question: For finding historical financial information of a public company, we have the SEC's database to reliably provide that for us. Is there anything similar for real estate, or do you and your colleagues have to get those records from the various brokerages who have previously held the property?
Best.
Yes. Most real estate is privately held; as a result, most data is private. So... it’s back to brokers, appraisers, and owners for the most accurate data. And thanks. Glad you liked the video.
Hi Josh, thanks a ton for these tutorials.
I'm going through them again in preparation for a task i'm awaiting as part of an interview for a CRE firm.
Just wondering, would it be acceptable to do the cash flow model on a quarterly basis, rather than annually? monthly would be too in depth for the information I will be provided, I feel.
Thanks!
It depends on the data they give you. If they give you a monthly interest rate or a tenant that vacates mid year, it’s probably easier to do it monthly. Use the data they give you to determine what your schedule should look like. In general, monthly is for cash flow and quarterly is for joint venture/equity waterfalls.
Great video
Glad you enjoyed it
Thanks Joshua, it was really good. Any idea if this can be replicated to India market.
Sure. It's just a matter of changing the names of the line items.
How can I email you a request of what a 5 single family home cash flow spreadsheet would look like over 3 years?
Great video! Could you make one for beginners that aren't super familiar with real estate. I'm currently a junior majoring in Finance and I'm trying to teach myself modeling but find most videos out there pretty intimidating.
That’ll probably be the next thing I do. I enjoy doing the hard stuff but most people just want the basics. Maybe I’ll start with discounted cash flow and build from there.
just dive in
I advise you to take Corporate Finance by Columbia University in Edx that's for free. It will give you basics of Discounted Cash flow sir Joshua was talking about.
Wouldnt the Cap Rate be : (Rent-OperativeExpenses)*(SquareFoot)*(1-GeneralVacancy)/PurchasePrice ???
Nice Q 🥴
I had a question, why its 1+ the Rate of Growth?
1 x 0.03 = 0.03 1 x 1.03 = 1.03. It’s just math.
Is this is a dcf model?
How can we build a financial modelling for 50 flats residential building of house 900 per sq ft ... Selling 4000. Per sq ft . Capex is 8 crore and opex will be 50 lakhs , pls help
This isn't a "for sale" model. It's for a rental. So not this video... sorry.
Are you doing internship at VCE?
It is command T on a mac!
I think I knew that... did I say something different? Either way, I'm on a PC. So... yeah, most of the keyboard shortcuts should work. Just not all.
@Zachary Brantley Got it. I haven't touched a Mac in 20+ years... the funny thing is that I used to do tech support for them in college... but that was a while ago. I guess some things just don't change.
Hi Joshua - 2 questions :
1) Does this model assume no mortgage? Let's say I'm a small residential investor with a mortgage on the property. Does the "Cash Flow from Operations" just represent the Rental Income minus Operating Expenses in that case?
2) Can you explain why there is no discounting of future cash flows in the model? Or does the IRR% account for discounting? I want to be sure not to overestimate my return by not accounting for discounting future cash flows.
Thanks!
Yep. I add mortgages in later videos.
And yes, an IRR is discounting the cash flows. That's the point. :)
"Macs are for artists and children" LMAO Haha, I 100% agree
I love the video! just wish u would slow down a tiny bit
To quote the movie Predator, “I ain’t got time to bleed.”
And on a more serious note, yes. I should.
Hello , I need the excel file
"Macs are for artists and children" LOL I agree!
I've considered putting it in my gmail signature line.
DUDE I LOVE YOU ABOUGT TO INTERVIEW FOR a pe real estate firm
Thanks and good luck
@@JoshuaKahr thanks