Project Development Financial Model
This Real Estate Project Development Financial Model is a specially designed financial model that is fundamentally different from all our other models due to the fact that the construction of a building requires enormous investment. Yet, the returns would come from holding the property and selling at a later stage or receiving minimal but continuous rental income for the next twenty to thirty years.
Some questions that arise from the investors’ point of view are the payback period and what would be their annualized return on investment. To answer these questions, you need a carefully designed financial plan that considers several assumptions as inputs. The input assumptions would allow you to change the input numbers. The model would recalculate each linked cell automatically for you, and even the charts would update to show you your new analysis without having to consult anyone again.
This tool, this Real Estate Project Development Financial model, takes into account over 12 years of our experience building financial models as a Head of Finance.
Key Features of Project Development Financial Model
1. Similar Business Models
Kingridge Real Estate Project Development, Khoshbin Company, Brookfield Asset Management.
2. How to Use this Model
For the purpose of making this model easy to use, Oak Business Consultant has designed this Real Estate Project Development Financial Model with maximum care. Each cell has a color code, and the input areas are all highlighted in peach color.
The User is only required to input data in peach color cells. All other cells are either helping calculations or results of the model. Therefore there is no need to change any other cell except peach-colored cells.
3. Key Features of Real Estate Financial Model
- Protected sheets
- Input sheet
- Development Cost and Pricing
- Startup Funds
- Salaries and Wages
- Monthly Profit and Loss Statement (P&L)
- Cash Flow Statement: Real Estate Project Development Financial Model
- Balance Sheet
- Project Evaluation Sheet
3.1. Protection of Sheets
It is usually a neglected but highly useful feature. Many financial modeling experts fail to realize this; the User of the Real Estate Project Development financial model may not have advanced knowledge of using spreadsheets and may accidentally change some formulas or even put in input in the wrong format.
We made sure to protect the basic structure of all the sheets included in the model and allow the USER to make changes in the cells only that they are required to use. It will give the User a heightened level of ease and satisfaction as they would know exactly where they need to change.
3.2. Input Sheet
The Input sheet for this model is newly designed to give you control over the classification of development cost compared to your other operational expenses. It allows you also to divide your construction costs into stages and then spread these costs over a defined period.
The land area required for development is linked with the inputs from the next sheet, where you will tell the model about each flat or unit’s size. The information will then help in calculating the land area required for the completion of the project.
The cost of construction per square meter is also clearly presented in an easy-to-understand way. In our experience, the contractors have a very clear idea of the cost per square meter for any job based on the client’s requirements and the requirements of the type of construction. So you can use those numbers easily to put them in our model and get your total cost of construction with respect to each unit, floor, building, or group of buildings.
You will have full control over what goes where! And we made it so easy to follow that you would not need anyone’s help to fill in the required information. We also made sure that the taxes are calculated correctly on the received amounts rather than accounting profits.
3.3. Development Cost and Pricing
We made this specifically designed separate input sheet for the Pricing metrics. Since you would like to know instantly the price of a UNIT or building that you need to set to earn a certain amount of return. this would also show you your cost for the same unit or building, giving you a precise estimation of your total costs and total return when the construction would be complete.
3.4. Startup Funds
As clear from the name, this sheet is only about the money required to complete the development and make all related arrangements. In addition, this sheet is also designed for you as a clear indication of how much commercial loan or mortgage loan you would need to cover your expenses after deducting your own and potential investor’s capital.
Your company will use the commercial loan and the mortgage loan to keep the cashflows afloat. You may alternatively use a credit line in reality, but this would give you an idea of your possible interest expenses for the future.
3.5. Salaries and wages
This is a separate sheet for you to incorporate any other salaries and wages costs that do not relate to your development project but pertaining to your company. An example would be marketing department salaries that do not work only on one project but on a number of projects built by your company.
It is a simple-to-follow sheet that gives you control over headcount, the month of hiring, and salary amount. You can also input the annual growth rate for salary.
This sheet has linked to the income statement, and therefore you do not have to worry about making changes anywhere else.
3.6. Monthly and Yearly Profit and Loss Statement (P&L)
This statement is your month-by-month and year-by-year complete picture of all the expenses and income in each month. So, when the revenues start coming in after you have completed the development of at least one stage and started selling the units. In this Real Estate Project Development Financial Model, you will see precisely how much you are spending on your non-construction-related expenses. The costs of construction are not a part of the monthly expenses.
The cost of Construction of the Unit is only recorded when you start selling the units accordingly, similar to the cost of goods sold. You purchase something, keep it for a time until it gets sold. So, to record its cost of sale with the revenue.
The Yearly P&L Statement is a summary of the monthly income statement. Looking at individual months can be tiring. Furthermore, looking at a full year’s performance gives some users a better idea of their yearly returns and profits.
3.7. Cash Flow Statement: Real Estate Project Development Financial Model
The Cashflow Statement is another handy report. It shows the actual timing of all cash inflows and outflows. It disregards whether the cash flow belongs to the construction of an asset or the company’s operational expenses. For this specific reason, it is a useful tool to find out the amount of cash required by the company to fund all its expenditures completely.
The Cashflow Statement notifies the client about the risk of going out of cash and therefore gives time to the business owner to arrange for additional cash when required. In this Real Estate Project Development Financial Model, we are also providing you an extended version of Financial Cashflows over 10 years period. This extended period would allow you to see profitability in those years to make better decisions about the future.
3.8. Balance Sheet
The Balance sheet sums up your company’s position at a specific time, usually the year-end. It is useful to note the account balances of each particular line item on that specific date. The most straightforward way of determining the value of a company’s total assets and liabilities is through the balance sheet. The total value of equity is easily measurable using this report.
The cost of construction, as discussed earlier, reported in the Balance sheet under Constructed Asset due to the nature of expenditure. Since the more you spent, the more will be the value of the Real Estate that you developed, and therefore it meets the conditions as an asset.
3.9. Project Evaluation Sheet
The project evaluation sheet is the most in-demand real estate investment calculator excel that we provide to you in this Real Estate Financial Model as a freebie.
Separately only this Discounted Cash Flow and Equity Multiple Valuation service used in real estate financial modeling sell for above two hundred dollars, and the price keeps climbing depending on the size of the organization. But in our financial models, we provide this project valuation real estate modeling along with other useful financial tools to make sure that your investment decisions are well informed.
It gives you several useful valuation methods packed in one sheet, like:
- Net Present Value analysis
- Equity-multiple method for project’s total value
- discounted cash flows valuation technique
- Return-on-Investment ratio to show you profitability
- Equity percentage offered to investors
- Cash Burn and its implication.
3.9.1. Net Present Value Analysis
The net present value, also known as NPV Analysis that is included in this financial model, provides you the total net worth of a project by assessing the initial investment against the present value of future net cash inflows. So you can decide whether you may wish to invest in this project or not.
The basic rule is that if the NPV of a project is positive, then the project is acceptable, but if the NPV of a project is negative, then the project is not feasible.
3.9.2. Equity Multiple Method for company’s valuation
This method commonly known as EBITDA Multiple methods. It uses the projected financial statement of a company and multiplies the furthest expected income of a company with a number. This number is the EBITDA Multiple. This number is calculated for this company by conducting research of the industry and competition.
It is, therefore, the most simple method if you know the EBITDA Multiple for your organization. Oak Business Consultants are experts in conducting this research and finding the most appropriate EBIDTA Multiple for your company.
3.9.3. Discounted Cash Flow Valuation Method (DCF)
This advanced approach to calculating the future value of a project or a company is very popular in real estate financial modeling. This DCF method first forecasts the net operating income of the company. It takes into account all the individual cash inflows and outflows. And then, it converts the cashflows of the future to their present values using the hurdle rate or required rate of return.
3.9.4. Return On Investment Ration (ROI)
ROI is another very popular investor ratio that this model includes. The NPV gives you an indication of the project is having a positive value or not. But it fails to answer you the percentage of return that you would get. This percentage would be useful if you wish to compare it against the interest rate of a loan that you may negotiate in the future.
So, ROI helps you to know exactly how much you can earn as a percentage from an investment. And then, if you fund this investment using equity, this whole gain would be yours, but if you don’t have that amount of money, then you must make sure that the interest rate on that loan is lower than the ROI. If your ROI is less than the required rate of return, then the project is not feasible.
3.9.5. Equity Percentage to Investors
Our Financial model for real estate investment analysis excel spreadsheet answers the most important question your investors would ask before investing in your company. That is how many portions of the equity you would offer them against their huge investment.
By nature, a startup and the owner of a startup start small and put in a lot of effort to make an idea successful. Their investment of money may not be huge, but their effort and unique idea are of great value that will earn money in the future. So when investors come with huge investments against small monetary contributions from the owner, they may also expect a greater share. But our model shows them how great the actual value of the company would be in the future, and therefore they would only get a fair share instead of the lion’s share.
3.9.6. Cash Burn Analysis
Cash burn is the sum of all expenses for the first one or two years. For a startup, this is crucial because the income is not certain, and if the company fails to maintain a healthy cash flow, then the companies have to go into forced liquidation or takeover. So to prevent this from happening, the startup needs to make sure that they have at least this much cash in the company at all times.
The dashboard is another beneficial aspect of this Real Estate Financial Model. It gives you a glance at all the business activities within seconds. In our model, every sheet and every chart is in sync with the data. So when you make changes to the inputs, the model automatically calculates all the results and also fixes the charts.
4. The benefits of the Rental Property Business Excel Financial Model.
4.1. Save Money & Time
This Financial Model excel template enables you to begin your startup planning with the least fuss and maximum of help. Since no more composing equations and formulas, no designing, no programming, no outlining, and no costly outside specialists required. Plan the development of your business instead of around with insignificant techy things.
4.2. Easy To Use
Easy-to-use yet very advanced financial planning tool. Whatever the size of your business is, with a very basic command of Excel, you can get complete and reliable outcomes.
4.3. Understand the Viability of Each Single Item
You are presumably considering a few item classes or a few choices for your primary item. Our Real Estate Project Development Excel Financial Model will assist you in sorting out various item choices and gatherings. Since it will give you an option to dissect and comprehend which one brings an enormous benefit and which one ought to be improved. Therefore, you will have the alternative of sharing the business gauge for multiple items and assessing the cost of goods sold, including the price of items themselves, their stockpiling, work, and other overhead expenses.
4.4. Graphical Visualization
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Oak Business Consultants Provides Various Financial Model Templates for almost every industry. Our models have revenue and input assumptions based on the particular industry, business nature, and operational requirements. We have worked in almost every industry and have built 100+ models for every specific niche market. For Example; in the Real Estate Industry, we have developed multiple strategies models for commercial and residential purpose properties. For example, Single-family units, apartments, commercial buildings, and so on.
The pre-built financial models are made to help an entrepreneur, by giving them financial projections for their business. These models provide a pre-built detail and structure to those who have a similar business revenue model as already available on the website. However, if you have a real estate business model which is unique and have several different revenue streams, like rental, commercial and parking fees, for example. Therefore, you need to Buy Customization Plans financial model services where you can use financial modeling services as per your business nature and operation requirements.
All pre-built models are Comprehensive and dynamic, designed by expert professionals by considering all the elements any business requires while computing the financial feasibility of the business. This financial model template will provide the assistance to compute the rental analysis, start-up summary, detailed monthly and yearly profit and loss statement, balance sheet, cash flow Analysis, and Break-Even Output summary. The template also has project evaluation reports and diagnostic sheets which will allow you to determine the project’s feasibility. Moreover, a visual representation of these reports is compiled on a dashboard to make a convenient report overview for the user.
The models will be in Microsoft Excel file format, and they are immediately available for download after making the purchase. A model can be downloaded multiple times in future from the same account. The optimal way to use the model is to familiarize yourself first with how the model is linked and structured. There are already detailed instructions on how to use the description mentioned under each product profile. Moreover, start with the input sheet with the most important assumptions, and start filling in the inputs as per your business information and real estate business strategy, like Hold/ Acquire/ Sell, which is clearly labelled and formatted in a pink color cell. For Example; If your region tax rate is 25% so fill it under the tax field, which is already highlighted so then a model will automatically compute all related calculations. The same procedure will go with all operating and variable cost sections, which are mentioned in the model.
Next comes the revenue-related input; then go through the inputs around growth rate, prices, and cost of sales, etc. These inputs will be changed from industry to industry; however, the basic structure is the same.
So far, you’ll get basic forecast reports, and now it comes down to looking at the Summary and Key Reports sheet(s) to see if the estimation makes sense: net income, gross margin and net cash flow, etc. Refine and iterate the inputs until you get a final result that makes sense for your business and your industry.
The Financial models are in xls. File format. We would recommend using Excel or Google Sheets to develop and edit financial models. In practice, We use Excel to build and edit models and Google Sheets to share with clients. Because Excel is usually a faster software for building and designing with so many features, however, Google Sheets can make it convenient for sharing models with the user.
Undoubtedly Yes! All formulas’ cells and sheets are completely editable and open. Therefore, you can edit anything as per your requirement. But you must need to consider the cell linkage first before making any change.
How to Edit the Mode?
All peach Areas are your INPUT CELLS. Please fill the PEACH AREA as per your business situation. All WHITE and GREY COLORED CELLS are CALCULATED and LINKED CELLS.
The Model is easy to use, dynamic and Transparent. We did not use complex formulas to build the Pre-built Financial Model or Financial Template.
Yes, We provide Half an Hour of free consultancy. We help you to explain
- The flow of Pre- Built Financial Model
- Explain Financial Terminology
- Explain How the Pre-built Financial Model work.
You can fix a meeting time with our Expert Financial Consultant and avail yourself of this opportunity to have one to one call with him/her
By selecting the right model, analyze your industry first and decide under which category you’re business is falling in.
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