All Forum Posts by: Robb Rafferty

In my experience with doing real estate financial modeling for developers and commercial building acquisitions there are 4 basic profit return components which are Cash flow, Appreciation, Loan Amortization, and Tax Shelter.

In your case, I think the key focus should be on the commercial mortgage or loan amortization structure and rate. The purchase price and rent seem about right, except it’s risky to have an operating loss. I would consider that unacceptable risk factor.

I still recommend doing a detailed analysis over a 10 year period.

Robb R.

Financial Data Analyst

Try these as data sources:

Federal Housing Finance Agency (FHFA)

Freddie Mac

Fannie Mae

Cae-Shiller

Regards

Robb

It's important to build out a comprehensive and detailed Cash Flow Pro Forma Model with your assumptions clearly spelled out. What is your best case, most likely case, and worst case scenario?

I like the way your calculator presents the deal.  

However, I think your rehab costs will be higher and always are in my experience.

I am a believer in enumerating and listing all costs and expenses in detail backed up with quotes.  

I like your advice. A video or webinar seems very doable. Thanks!

You need to do an in-depth analysis of the deal starting with the Annual Property Operating Data and forecast cash flows (in and out). This is essential for commercial properties as I've seen many initial deals that look good on the back of the envelope, only to see the details are a major money losing proposition.

I've been doing financial modeling and financial analysis for 30 years such as 3- statement forecasts and financial ratios. I recently completed a series of real estate cash flow models including a $100M development project and a number of commercial building acquisitions. I am happy to report that my in-depth models and analysis built from the ground up prevented some disastrous money losing acquisitions. Also able to demonstrate best cost strategies for development projects. I have discovered I have an aptitude for real estate financial modeling, as well as really enjoy the process for best strategy and yes/no decisions.