Discounted Cash Flow Analysis (DCF) in Real Estate Explained

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Discounted Cash Flow Analysis (DCF) in Real Estate Explained // In commercial real estate, the discounted cash flow (DCF) analysis is at the core of property valuations for the vast majority of real estate investors, but because of how real estate deals are typically financed (especially by major private equity firms), the way this is applied in practice often isn't all that straightforward.
And especially since this is one of the most common technical topics that tends to come up within commercial real estate interviews, in this video, I want to break down exactly what a discounted cash flow looks like in the context of a real estate deal, and how this comes into play when investors value a commercial property.
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🕒 Timestamps 🕒
0:00 Introduction
0:45 Defining the DCF
3:36 The Math
7:23 Putting It All Together
How To Choose a Discount Rate: • How To Choose a Discou...
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*Nothing in this video should be construed as tax, legal, accounting, valuation, or financial advice or recommendation. All information in this video is intended solely for educational purposes, and you are advised to consult with your own personal professional advisors regarding your personal investment decisions.
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23 июл 2024

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Комментарии : 13

@BreakIntoCRE 6 месяцев назад

Any other real estate finance terms you'd like to see covered in more detail in a future video on the channel?

@h00Lia 6 месяцев назад

Have you covered common Excel formulas? Thx!

@BreakIntoCRE 6 месяцев назад

@@h00Lia absolutely - see the following videos for some of the most commonly used Excel functions in real estate financial modeling: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-JuUeS9W5jYc.html&pp=ygUdYnJlYWsgaW50byBjcmUgZXhjZWwgZm9ybXVsYXM%3D ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-GauDG60wepo.html&pp=ygUdYnJlYWsgaW50byBjcmUgZXhjZWwgZm9ybXVsYXM%3D

@Bratwhotravels 6 месяцев назад

Can you cover levered and unlevered ones

@luxsend575 6 месяцев назад

Thank you

@eightonecapital6554 5 месяцев назад

Good morning Justin. I just saw your course on Udemy and was wondering if within the course you talk about escalation factors (lease, ground lease, absorption/occupancy). I only ask because i have been tasked with creating a commercial real estate development model for my company and a few of the requirements for the model are lease escalation, ground lease escalation, and occupancy escalation. Thanks in advance!

@tuinhanh8873 6 месяцев назад

RNAV plsss. Many tksss!!!

@hoomanbeing4918 25 дней назад

5:13 you forgot to subtract the initial investment to make it net. that would be PV only right?

@mmm22chess 23 дня назад

Yes. He did PV

@nathankurz 6 месяцев назад

Most of the analysis I’ve done use the market rate as the discount rate. 15% is wild to me, I don’t know where you’re going to find those market cap rates. Can you give one example of a place where you find 15%?

@Kurt-rg8jq 5 месяцев назад

Where do you source the market rate? Like 10-yr treasury?

@naimaahmed1603 6 месяцев назад

How to do financial modeling for multiple properties that don’t use interest rates but a preconstruction sales or any property that don’t use interest rate from the bank 🏦. This case is applicable to Muslim countries as they believe interest base loans is anti their faith. In such situations what can you advise. Thank you

@mostimusic2616 6 месяцев назад

That’s a really interesting question. I have some Muslim friends and they don’t even care for interest rates, but they are mostly Turkish and therefore not so strict and do many things that are haram. Are there governments which consider your approach? Like Malaysia or Indonesia. Would be great to hear about that.