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Real Estate Financial Modeling Accelerator (Updated October 2024)

Prior to launching the Accelerator program, Michael and I fielded email after email requesting a more structured real estate financial modeling training program on the site. Over the years, we've covered hundreds of real estate modeling…

Fixed Costs

Costs that do not change based upon of the property’s level of occupancy or operation. For example. the landlord’s monthly insurance premiums will generally remain fixed regardless of whether the property is 50% or 80% occupied. In some…

Expense Stop

A mechanism in a Full Service Gross Lease, the Expense Stop is a fixed amount of operating expense above which the tenant is responsible to pay. Thus, the landlord is responsible to pay for all operating expenses below the Expense Stop, while…

Expansion Rights

The legal right given by a landlord to a tenant to occupy additional leasable area in a building. These rights constrain the landlord’s ability to lease the building and are thus typically only seen when tenants have a high degree of negotiation…

Factory Outlet

A factory outlet center is a retail subtype characterized for having outlet stores owned by manufacturers and retailers that sell brand-name discounted goods. Anchors for this subtype include those same manufacturers' and retailers' outlets…

Equitable Title

Equitable title and legal title are like two parts to a complete title. Equitable title gives an entity beneficial interest in the property or the full use and enjoyment of the property. Legal title provides enforceable legal ownership in court.…

Elevation

An architectural drawing that depicts an object in two dimensions and from a front, side, or back vantage point. Putting 'Elevation' in Context Pinnacle Homes, a national home builder, is developing a new single-family subdivision called…

Environmental Site Assessment

The Environmental Site Assessment (ESA), also known as a Phase I ESA, researches the current and historical uses of a property and identifies any subsequent environmental impacts of which an investor would want to be aware. The ESA will look…

Financial Model

A comprehensive, quantitative tool that combines various financial and operational inputs to forecast and predict the financial performance, value, and viability of a commercial real estate investment or project. A financial model enables…

Equity Multiple

A return metric which shows how much an investor earned on his or her invested capital. The equity multiple (EMx) is calculated by dividing the sum of all capital inflows (capital distributions) by the sum of all capital outflows (capital contributions).…

Economic Vacancy

The difference between the gross potential rent at a property and the actual rent collected. An example of this would be an apartment complex with a 2-week free rent period for new tenants and a 50% annual tenant turnover. Assuming the property…

Effective Gross Revenue

Also referred to as Effective Gross Income, EGR, or EGI. Effective Gross Revenue is the sum of total Rental Revenue and total Other Income, less any adjustment for general vacancy and credit loss. Effective Gross Revenue = Total Rental Revenue…

Earn-Out

A provision within a loan agreement that allows the borrower to receive additional funds from the lender upon completion of certain events (such as receiving a Certificate of Occupancy or surpassing pre-defined operating performance thresholds).…

Earnest Money Deposit

An initial deposit paid by the buyer as a show of good faith to the seller. The money is typically held in escrow until the transaction closes and all suspensive conditions have been fulfilled, following which the earnest money is used to offset…

Draw Schedule

The construction draw schedule details how construction loan proceeds are anticipated to be used/disbursed over the loan period, specifically for what purpose and at what point in the development project. Construction loans are not immediately…

Design Development

The period following schematic design whereby all design team consultants work together to further refine the project details. In this phase, the design team begins to select systems and materials and looks carefully at the coordination of all…