Description

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 the Real Estate Financial Model

1. Protected sheets
2. Input sheet
3. Development Cost and Pricing
4. Startup Funds
5. Salaries and Wages
6. Monthly Profit and Loss Statement (P&L)
7. Cash Flow Statement: Real Estate Project Development Financial Model
8. Balance Sheet
9. Project Evaluation Sheet
10. Dashboard

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 costs 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 of 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 pertain 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 the 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 and 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, is 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 with 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 is 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.

3.10. Dashboard

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 help. Since no more composing equations and formulas, no designing, no programming, no outlining, and no costly outside specialists are required. Plan the development of your business instead of around 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 the 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

In this financial model excel template, all necessary Calculations and estimations are visually represented on a dashboard. You don’t need to move sheets to compare data.

This Product includes1 Excel File