Real Estate Investment Analysis and Financial Modelling

Course overview

Course outline

1. 1Day 1: Real Estate as an Investment Asset

   • Real estate asset classes and their risk and return profiles
   • Market cycles, supply and demand drivers
   • Income, capital growth and total return
   • Key metrics: yield, cap rate, NOI and occupancy
   • Due diligence questions before investing
2. 2Day 2: Building the Property Cash Flow Model

   • Structuring a clear and auditable model
   • Rental income, vacancy and lease assumptions
   • Operating expenses, service charges and capital expenditure
   • Net operating income and annual cash flows
   • Exit value and terminal capitalisation rate
3. 3Day 3: Investment Returns and Valuation Measures

   • Time value of money for real estate decisions
   • Net present value and discount rate selection
   • Internal rate of return and its limitations
   • Equity multiple, payback and cash-on-cash return
   • Comparing investments with different profiles
4. 4Day 4: Financing, Leverage and Risk

   • Debt structures, loan-to-value and interest cover
   • The effect of leverage on returns and risk
   • Sensitivity analysis on rents, costs and yields
   • Scenario and break-even analysis
   • Identifying and mitigating key investment risks
5. 5Day 5: Investment Decision and Recommendation

   • Integrating analysis into an investment case
   • Investment committee papers and presentations
   • Communicating assumptions and uncertainty
   • Case study: full analysis of an investment opportunity
   • Personal action plan for applying the models