REAL ESTATE
FINANCE BASICS
, MFIN 358
Cash Flow and Real Estate
Business Goals Might Include
• Maximize Long Term Shareholder Wealth
• Short-Term Financial Goals, i.e. cash flow
• Or non-financial goals such as :
• Maintain a family friendly place to work
• Retain quality employees through tough markets and tough times
• Develop or own only the highest quality properties in prestige locations
• Be the largest owner in terms of market share of a certain type of
property in a local market
Short Term Financial Goals Might Include
• Satisfy the requirements of the lender in terms of pre-leasing or debt
coverage cash flows
• Satisfy the minimum required first year cash on cash returns required of
investors
• Project minimum internal rates of return for the entire holding period of
some minimum percentage
• Maintain occupancy levels above 95% in all portfolio properties
Financial Analysis Decision Models
• Single period model such as:
– Cash on Cash
– Gross Rent Multipliers
– Capitalization, “Cap” Rate
• Multiple period model
– IRR - Internal Rate of Return
Mfin358_Session_Handout_FINA_RealEstateFinanceBasics
Tarek Kettaneh Page
This study source was downloaded by 100000829291903 from CourseHero.com 1 of 6 08:47:35 GMT -06:00
on 02-04-2022
https://www.coursehero.com/file/100442369/REAL-ESTATE-FINANCE-BASICSpdf/
FINANCE BASICS
, MFIN 358
Cash Flow and Real Estate
Business Goals Might Include
• Maximize Long Term Shareholder Wealth
• Short-Term Financial Goals, i.e. cash flow
• Or non-financial goals such as :
• Maintain a family friendly place to work
• Retain quality employees through tough markets and tough times
• Develop or own only the highest quality properties in prestige locations
• Be the largest owner in terms of market share of a certain type of
property in a local market
Short Term Financial Goals Might Include
• Satisfy the requirements of the lender in terms of pre-leasing or debt
coverage cash flows
• Satisfy the minimum required first year cash on cash returns required of
investors
• Project minimum internal rates of return for the entire holding period of
some minimum percentage
• Maintain occupancy levels above 95% in all portfolio properties
Financial Analysis Decision Models
• Single period model such as:
– Cash on Cash
– Gross Rent Multipliers
– Capitalization, “Cap” Rate
• Multiple period model
– IRR - Internal Rate of Return
Mfin358_Session_Handout_FINA_RealEstateFinanceBasics
Tarek Kettaneh Page
This study source was downloaded by 100000829291903 from CourseHero.com 1 of 6 08:47:35 GMT -06:00
on 02-04-2022
https://www.coursehero.com/file/100442369/REAL-ESTATE-FINANCE-BASICSpdf/
